The following first appeared at the MacIver Institute.
Back-to-school shopping in Wisconsin is once again more expensive than in neighboring states thanks to the state’s minimum markup law, which outlaws sale prices that are too low.
The minimum markup law, formally known as the Unfair Sales Act, bans retailers from selling merchandise below cost. The law, originally passed back in 1939, also requires a 9 percent price markup on specific items like alcohol, tobacco and gasoline.
Unfortunately, Wisconsinites are forced to pay for this archaic law that’s still on the books despite ongoing efforts to repeal it.
According to advertisements obtained by the MacIver Institute from late August, Walmart stores in Milwaukee charged higher prices for a number of back-to-school items compared with other Walmart stores in Minnesota, Iowa, and Michigan.
Families in Milwaukee buying basic items like composition books, markers, and crayons can expect to pay anywhere from 12 to 146 percent more than shoppers in St. Paul, Minn., Dubuque, Iowa, and Kalamazoo, Mich.
Some common school items cost on average 90 percent more in Milwaukee. Crayola Crayons posted the single biggest price variance, costing almost 150 percent more in Milwaukee than in cities in neighboring states.
Parents picking up a Composition book in St. Paul, for example, only paid 50 cents. That same Composition book cost 56 cents in Milwaukee. Crayola markers cost 97 cents in St. Paul, but thanks to the archaic minimum markup law, those same markers cost $1.97 in Milwaukee, a 103 percent difference.
Walmart’s circulars boast that their great sale prices mean “$10 goes far,” but it goes a lot farther if you’re not shopping in Wisconsin. A basic shopping list would cost 90 percent more for a Milwaukee back-to-school shopper than in nearby states.
Shoppers in Illinois have previously enjoyed the same lower prices as other Midwestern states, as pointed out by the MacIver Institute last year. But this year, possibly thanks to the state’s recent draconian tax increases, families from Rockford to Chicago are joining Wisconsinites in paying inflated prices.
Efforts to repeal the antiquated minimum markup law stretch back several years.
In 2015, Sen. Leah Vukmir (R-Wauwatosa) and Rep. Jim Ott (R-Mequon) introduced a bill that would have eliminated the Unfair Sales Act. Unfortunately, the repeal bill did not receive even a public hearing in either house.
Another effort earlier this year by Rep. Dale Kooyenga (R-Brookfield) to reduce the minimum markup as part of a transportation funding package also fell flat, so the law remains on the books.
Vukmir, Ott, and other legislators haven’t given up. Earlier this year, they were joined by Sen. Dave Craig (R-Town of Vernon) and Rep. Dave Murphy (R-Greenville) in introducing a modified repeal bill.
This latest effort to relieve Wisconsinites from the burden of higher prices, however, has received the same silent treatment as previous repeal efforts.
Even though minimum markup repeal has hit a wall in the Legislature, a 2015 poll found that Wisconsinites are tired of paying higher prices and want the law taken off the books. The poll was conducted by reputable research firm Public Opinion Strategies and found that 80 percent of respondents had an unfavorable view of the minimum markup law when told “Wisconsin residents are required to pay more for many on-sale items than residents in neighboring states simply because of this 75-year-old law.”
Wisconsinites were just as angry when told that “the law forbids retailers from selling to consumers below cost and also requires that gasoline retailers sell gas to consumers with a minimum 9 percent markup, meaning Wisconsin drivers have to pay more for gas here than drivers do in other states.”
Some retailers have used the law to file complaints with the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) against competitors who were offering items for too low of a price. In 2015, MacIver first reported on numerous complaints filed against Meijer, a privately owned Michigan-based grocery and supercenter chain of stores with more than 200 locations nationwide, as it made its first foray into the Wisconsin market.
The minimum markup law also makes illegal in Wisconsin many of the discounts received on popular national bargain hunting days like “Black Friday” or “Amazon Prime Day,” which in Wisconsin could better be called “Amazon Crime Day.”
With repeal efforts on the rocks once again, bargain hunters should beware: Wisconsin’s Price Police remain on the prowl.
I joined Oliver Burrows on WXCO in Wausau to update listeners on the Foxconn deal, which went through its second public hearing at a Joint Finance meeting Tuesday in Sturtevant.
Visit WXCO here: www.1230wxco.com
I joined Bob Schmidt on Today’s Talk 1490 WLFN in La Crosse Wednesday morning to give a high-level overview of the Foxconn deal, where it’s at on the road to approval, and what to expect next.
Visit Today’s Talk 1490 WLFN here: www.1490wlfn.com/index.html
I joined Matt Kittle from the state Capitol as the Assembly Committee on Jobs and the Economy debated and votes on the historic $3 billion Foxconn incentives package. Kittle is filling in for Vicki McKenna on News/Talk 1310 WIBA.
I joined Vicki McKenna on Monday on her show on WIBA to talk about my column at the MacIver Institute exposing what appears to be a campaign to plant phony letters to the editor in papers around the state to manufacture a “grassroots” groundswell in favor of a gas tax increase.
I joined Jim Schneider on VCY America TV’s inFocus for an hour-long live interview on Monday, and took calls from around the state. It was the last installment of the season.
The following column (by me) originally appeared at the MacIver Institute.
The mainstream media seems fixated on the insider politics surrounding repealing and replacing Obamacare, but the average person couldn’t care less about parliamentary procedures and intra-party squabbling. They’re faced with an inescapable reality: healthcare is unaffordable and inaccessible thanks to Obamacare. The question they want answered is: What is the point of having insurance if you can’t afford to use it?
The out-of-touch media coverage reminds me of the apocryphal tale about elite passengers on the Titanic arguing over the bar tab as the ship takes on water. Meanwhile, the people in steerage are stuck behind those gates trying to escape before the water reaches their heads.
The water is rising fast. In 2017, the average premium increase on the individual market in Wisconsin was 16 percent. One of the most egregiously expensive plans was in western Wisconsin, costing $51,000 per year in premiums for a couple unfortunate enough to be in their 50s with three children.
The cost of Obamacare plans is staggering. In a report last year that scoured the federal database of 2017 premiums in Wisconsin, the MacIver Institute found that a family of four would fork over an average monthly premium of $1,609.11 for a platinum plan – $19,309.32 per year – while a mid-level silver plan would cost them $1,297.02 in average monthly premiums, or $15,564.24 per year
Deductibles – the out of pocket cost of using your health insurance – also keep spiraling upward. For a top-tier platinum plan in Wisconsin, we found the average deductible is $900 for a family and $450 for an individual.
However, for a mid-level silver plan, the average deductible is $7,015.71 for a family and $3,491.92 for an individual. The average catastrophic plan deductible will be $14,300 for a family and $7,150 for an individual. That’s not cut-back-on-Starbucks money, that’s bankruptcy court, even for those earning a decent salary.
Obamacare proponents constantly point to the number of people they claim are insured because of Obamacare. But conflating health insurance with access to actual health care is looking through rose-colored glasses. In the real world, Obamacare decimates household budgets, especially middle class families who don’t receive federal subsidies and are whipsawed by the full cost of both premiums and deductibles.
Despite the double digit price spikes and astronomical deductibles in Wisconsin, we drew the long stick compared with our neighbor across the Mississippi River. Minnesotans on the individual exchanges got stuck with premium hikes as high as 67 percent in 2017.
In response, Minnesota Governor Mark Dayton and the Legislature were forced to bail out 123,000 middle class families to the tune of an additional $313 million in taxpayer money.
“If you like your plan, you can keep your plan,” President Obama said in PolitiFact’s 2013 Lie of the Year. In Minnesota, that lie came with the added asterisk that taxpayers have to come to your rescue after finding out your state’s politicians fell for a federal “free money” scam.
Fortunately, Gov. Walker and Wisconsin’s fiscally conservative legislature were more skeptical of Obama’s P.T. Barnum routine, saving us from a similar fiscal calamity.
The Minnesota example highlights an important and all-too-often overlooked point. If you’re unfortunate enough to make too much money to receive a federal subsidy – like most middle class families in America – you’re on the hook for the entire inflated premiums plus exploding deductibles for your Obamacare plan.
Middle class families stuck with Obamacare are drowning in the exorbitant costs, while poorer families who do receive subsidies can’t even afford to see their doctor because their deductibles are so high that the coverage is little more than a piece of paper. Worse, if you’re so cash-strapped that you choose to go without coverage, the IRS slaps you with a fine.
I recently heard the story of one low-income Wisconsin family of five – a husband, a wife, and three kids under the age of 10. Their punishment for going without insurance for three months last year was more than $800.
Only a nanny-state bureaucrat in a Washington, D.C. corner office would be so divorced from reality that they’d think such punitive policies are somehow fair, right, or just. They should get out of their plush enclaves and see how their policies really affect people. Or better yet, if Congress can get its act together, Obamacare bureaucrats should be standing in an unemployment line.
Obamacare cheerleaders can go on cable news and pen all the columns they want touting the expansion of health insurance coverage, but what good is having health insurance if the deductible alone will send your family into bankruptcy?
Obamacare’s continuing price spiral is caused in part by declining competition across the nation. One-third of counties in the United States have only one insurer this year, according to the Kaiser Family Foundation. Residents in these counties will have only one choice – in other words, no choice at all.
Wisconsin’s Obamacare market lost an average of 1.39 insurers per county from 2016-2017 according to our analysis. Fourteen counties have just one or two insurance companies offering Obamacare plans in 2017.
Competition – which inevitably “bends the cost curve down,” to parody another failed Obama promise – is drying up by the week. Just this month, Aetna announced it would stop selling Obamacare policies entirely next year, citing $381 million in losses in the first quarter of 2017 and $700 million in total losses.
Aetna joins insurance giants Humana and UnitedHealth in completely withdrawing from Obamacare in the wake of massive, unsustainable losses. A network of other non-profit health insurance co-ops established by Obamacare have also folded, taking billions of taxpayer dollars down with them. Out of 23 co-ops, only 4 remain, including Wisconsin’s imperiled Common Ground Co-op, which survived only after a secret infusion of cash.
Insurers’ inability to simply break even on Obamacare plans is the result of far more older, sicker enrollees and far too few younger, healthier enrollees to balance the actuarial tables. Obama should’ve been honest with the American people and said the law depends on younger and healthier people paying exorbitant rates for coverage they don’t need in order to prop up the rickety system he and Democrats rammed through Congress.
Obamacare is in a death spiral. Though the House’s version of repeal and replace narrowly passed – certainly a cause for celebration – Congress remains mired in inaction and Americans remain stuck in quicksand. Reporters wringing their hands over CBO scores and telenovela theatrics should remember that few outside the beltway ultimately care about any of that.
There is no bailing out or patching up Obamacare. It will eventually sink to the bottom of the abyss. When it does, nobody in real America will thank the media for keeping them up to date with irrelevant process stories as they go down with the ship.
The following column originally appeared at the MacIver Institute.
At long last, the Legislature’s Joint Finance Committee will have to make a decision on whether to adopt a self-funded insurance system for state employees’ health insurance. The bad news is that Governor Walker’s proposal to make the switch and save $60 million is all but dead in the state Legislature.
On Monday, the Group Insurance Board submitted contracts with third-party administrators for a self-insurance system. Those contracts spell out in black and white at least $60 million in savings over the biennium – that’s on top of $22 million in possible savings if Obamacare and its obscene tax burden is not repealed. With the contracts in hand, JFC now has about three weeks to convene a meeting and make a decision.
“Since taking office, we have sought to reform government to make it more accountable and cost effective to the hard-working taxpayers,” Walker said in a statement on Monday. “Moving to self-insurance is one of these reforms and we urge the Joint Committee on Finance to approve these contracts and invest these savings into the classroom.”
Unfortunately, it appears that JFC is prepared to leave this windfall for taxpayers on the table. Why? We’ve heard a carousel of arguments against self-insurance that have all stalled, but the final stand for self-insurance naysayers might boil down to pure politics.
Early arguments by opponents of self-insurance breathlessly claimed that the move would gut state workers’ health insurance plans. Ignoring how out of step these lavish plans are compared with their private sector counterparts, it quickly became clear this doom-and-gloom claim had no basis in reality – especially after the actual proposals were received.
Next, the self-insurance doom-mongers portrayed the switch as a journey down a long, dark tunnel. The fact is that there’s nothing mysterious or scary about self-insurance; Wisconsin already partly self-insures its dental plan and its pharmacy plan.
At least 20 states completely self-fund their state employee health plans, including Minnesota, which moved to 100 percent self-funded insurance in 2002. Also, 46 states use self-insurance in some way.
In the upper Midwest, no states are fully-insured, meaning none completely rely on private insurance and all are self-funded at least in part.
More than 90 percent of all large employers, companies that employ 5,000 or more employees, also use self-funded insurance. To say adopting this system would be risky and experimental is diametrically untrue. In fact, it would be routine and economical.
Critics then moved on to prophesizing that the switch could pose a potentially catastrophic financial risk to the state. True, the state would be directly assuming the risk rather than putting insurance companies in the middle. But barring an unprecedented epidemic sweeping state office buildings, the risk factor has been greatly hyped.
The risk would actually be low because of the sheer size of the state’s workforce, which means total annual payouts would be predictable and fluctuations minimal, according to insurance expert Dean Hoffman, who recommended the switch to the Governor’s Commission on Government Reform last May.
Legislative Republicans are also uncertain about the future of Obamacare, which imposes a variety of taxes and fees on the insurance marketplace that would be absorbed by taxpayers in Wisconsin.
JFC co-chair Sen. Alberta Darling cited Wisconsin’s relatively low premium increases at a Tuesday press conference. “Why would we want to shift out of that and into uncertainty at this point?” she asked.
Caution isn’t unreasonable, but moving to self-insurance would actually protect Wisconsin taxpayers from uncertainty. Taxpayers should be the focus, not protecting the platinum health insurance of government employees.
Obamacare hits the insurance market, and thus taxpayers, in two big ways. The reviled Obamacare Cadillac Tax applies an exorbitant 40 percent tax on all employee benefits exceeding $10,200 annually for an individual, $27,500 for a family.
Sadly, the AHCA healthcare bill that passed the House last week retains the Cadillac Tax, although it pushes off the starting date of the Cadillac tax until 2026. Self-insurance would help mitigate that cost by eliminating the middle man in the current setup.
Then there’s the insurer tax, a special levy charged to private insurance companies that’s tied to the insurer’s premiums collected in the previous year. In 2016, the insurer tax ranged from 1.5 to 3.5 percent, with future rates yet to be decided. As the state’s deputy commissioner of Employee Trust Funds, Lisa Ellinger, pointed out last year, the state pays out about $1.4 billion annually in premiums.
Self-funded insurance systems are exempt from this tax. Quick cocktail-napkin math shows that switching to self-insurance would conservatively save tens of millions on top of the $60 million outlined in the contracts.
Despite ongoing uncertainty about Obamacare, keeping the status quo is precisely the wrong decision. Assuming Obamacare’s taxes are here to stay, seizing the $60 million moment would be responsible management of taxpayer dollars. Keeping the status quo and hoping Washington politicians do the right thing would not.
Instead, legislative leaders are considering “finding” $60 million in savings within the existing system. “We’re not saying no to savings. If we do that we’re going to find a similar amount of savings in some way, shape or form,” said JFC co-chair Rep. John Nygren on Tuesday.
If that’s actually possible, it begs the obvious question: how much taxpayer money has been wasted by not finding these supposed savings years ago?
With most of the arguments against self-insurance out of gas, opponents’ final stand may betray the truth: self-insurance is good policy, but protecting the status quo is even better politics. Or protecting the status quo is better politics for any politician worried more about the next election and less about taxpayers. Unfortunately for taxpayers, just about every politician in Wisconsin fits in that category.
The fact that self-insurance is good policy is evident from how many states and large employers use it successfully.
The likely end result is that Wisconsin taxpayers will get a watered-down half-measure that goes through the motions of saving taxpayer money while keeping the bloated and expensive existing system in place. That’s bad public policy.
Here’s my column from the Sunday, March 12 edition of the La Crosse Tribune.
The nightly news and the morning paper are great ways to keep informed. Unfortunately, they’re also great avenues for politicians to peddle their schemes for foisting new taxes on unsuspecting taxpayers.
When I heard La Crosse County wants to become a “premiere resort area,” and that this designation would generate millions to fix roads, at first I felt like I was in Oprah’s audience that day she gave everyone a new car.
In reality, the proposal for a new “Premiere Resort Area Tax,” or PRAT, is more like when you overbid on the showcase showdown on The Price Is Right and the infamous fail horn blares just before you’re escorted from the stage.
The PRAT tax, the latest tax scheme cooked up by La Crosse County officials, is really just another half-percent sales tax that could be imposed on nearly all retail businesses in the county. As with any other sales tax, this $6.6 million new tax will inevitably be paid for by consumers like you.
“But without more money we can’t fill the potholes!” the tax-and-spend crowd keeps shouting in your ear every time you turn on the TV. What they conveniently omit are their own failures to properly prioritize county spending.
La Crosse County budgeted for $136,764,518 in revenue for 2016. It planned nearly $33 million in property tax collections and $11.6 million from the county’s 0.5 percent sales tax. Yes, the county already has a sales tax onto which the proposed PRAT tax would be stacked.
According to the state Department of Revenue, 44 categories of business are subject to this tax in any jurisdiction that enacts it — bars, restaurants, gas stations, clothing retailers, hotels — even a category called “miscellaneous retail stores,” lest any devious boutique business falls through the cracks. In short, pretty much every business that a tourist could theoretically walk into would be subject to the PRAT tax.
The PRAT was conceived for the most innocent of reasons. When the summer residents of certain areas, like the Wisconsin Dells, fled for the winter, the Dells and similar tourist reliant areas needed a consistent revenue source.
Thus the Legislature invented the PRAT, but it required at least 40 percent of assessed property values in the taxed region to be composed of tourism-related businesses in order to be enacted. Thus, only six municipalities in Wisconsin currently have a PRAT tax, according to the Department of Revenue. At 5.3 percent, La Crosse County doesn’t come close to qualifying.
While our home is a beautiful region with plenty of tourist attractions, it’s hardly a “premiere resort area” according to state law. Nobody’s going to be winning a trip to La Crosse on the Wheel of Fortune.
Fortunately for the pro-PRAT crowd, there’s an exemption. After an advisory referendum, the Legislature can pass a special measure allowing the county to proceed with the final steps required to enact the tax.
Taxpayers should keep an eye on the big picture, and I don’t mean the size of their property tax bills.
The county should make better decisions with what it does with taxpayer money, and roads should clearly be a priority. However, when the county board voted to nearly double its debt in 2015 from $59 million to $110 million in one fell swoop, filling potholes or fixing cracks was hardly a priority. Instead, the county embarked on a series of expansions of its office complex downtown.
Thankfully, we have a vast network of paved, pristine bike trails around here–nary a pothole in sight. Or I suppose these days we’re supposed to call them multi-use trails.
The county is clearly taking in significant revenue, it’s just not choosing to spend it on roads. Now, county officials want to hit up hard-working taxpayers for even more. If your neighbor said they desperately needed to borrow money from you, all the while installing an in-ground pool and building a breakfast nook off their foyer, any rational person would raise an eyebrow.
A tax by any other name is still a tax. Taxpayers beware.
Read the original column here.
I spoke with Vicki McKenna on Madison’s WIBA this afternoon about my Wednesday morning at the state’s Group Insurance Board meeting.
Boring, you say? Usually – but this time, a protester interrupted the meeting with a profanity-laced diatribe. She was angry that the board, in charge of taxpayer-subsidized insurance for state employees, no longer would cover gender reassignment surgery (once called a sex change operation) and attendant hormone therapy and other costs that transgender people incur.
Because the video was too explicit for radio, it’s included below. Profanity warning.