Ashamed I didn’t spot this story earlier:
The Wisconsin Supreme Court ruled Tuesday [July 20] that the state must repay a medical malpractice fund more than $200 million it took to balance the budget three years ago, potentially throwing the current budget into disarray.
I wrote about this a few months ago. Basically, Wisconsin required health care providers to buy med mal coverage in excess of $1 million from a state run company. When the state hit budget problems, it liberated $200 million from the company’s surplus with no promise to every pay it back.
The company didn’t have $200 million. To scrape up the cash, it had to borrow $40 million – from the state. With interest.
This stuff happens from time to time at government-run insurance companies. Politicians don’t see a surplus against adverse results. They see a pile of cash to be spent, and they, frankly, steal it. If I ran a company that way, I’d be blogging from Leavenworth.
These sorts of thefts, I’m told, are common enough that some state-run insurers reserve – ahem – conservatively to keep money from the government’s hands. If the reserves get too high, the company gets battered by its customers, who believe their rates are unjustifiably high.
Fortunately for Wisconsin’s doctors, the Supreme Court agrees with me.
I feel terribly sorry for Wisconsin taxpayers, who have a big hole in their budget now. But the answer to that problem is raising taxes or lowering services, not stealing surplus.