Spurred by Trump budget bill, Wisconsin cashes in on hospital money; GOP leaders split on decision

MILWAUKEE (CBS 58) -- In a very unusual rush, Democratic Gov. Tony Evers signed into law the next two-year budget almost immediately after a Republican majority in the Assembly passed the bill in the early morning hours Thursday, July 3.

Evers and top GOP lawmakers had announced an agreement earlier this week on a budget framework that resolved major sticking points around education funding, tax cuts, child care and the UW System.

However, the item that prompted the most urgency this week was a provision raising the tax Wisconsin charges its hospitals. Under the federal budget House Republicans passed Thursday afternoon, states would be restricted in their ability to tax hospitals' revenue.

The highest tax currently allowed under federal law is 6%, and Wisconsin had been charging its hospitals a 1.8% fee. Both Evers and Republican legislative leaders agreed on a budget provision raising Wisconsin's tax to 6%.

30% of the money raised from the higher hospital fees would go to Wisconsin's Medicaid program. That would leave $1.1 billion for additional investments in Wisconsin hospitals, and there'd be matching federal dollars to help boost the state's Medicaid coverage.

"We will be able to access help from them to keep our hospitals afloat," Evers told reporters in his officer after signing the budget.

The rush to pass and enact the budget bill was prompted by changes in President Donald Trump's "One, Big, Beautiful Bill." Over time, the cap on hospital taxes would drop to 3.5% for states. The chance to maximize hospital funding appealed to top Republican lawmakers, including Assembly Speaker Robin Vos (R-Rochester).

"Look, if the federal government has a program that allows money to come back to Wisconsin to help reduce the cost of health insurance," Vos said. "That has no negative impact, doesn't expand welfare, doesn't do anything that wouldn't be where a conservative could advocate for that, that's something we should all be proud of."

Not every high-ranking Republican supports the provision. Senate President Mary Felzkowski (R-Tomahawk) turned heads on the Senate floor Wednesday night when she shared she'd be voting against the budget because of the hospital fee increase.

"$1.1 billion annual windfall to the hospitals," she said. "Zero reforms to try to control the costs for the constituents, the employers."

According to the most recent annual report from the Wisconsin Hospital Association (WHA), which is released last October, Wisconsin hospitals had a net income of $2.1 billion in 2023. However, the report also noted 55 of the state's 167 hospitals were operating at a loss.

"Hospitals must have sustainable funding if we expect them to maintain and expand critical services that communities need," WHA President Kyle O'Brien said. "We applaud the policymakers on both sides of the aisle who recognized this reality."

The hospital association noted safety net providers, with a higher percentage of patients on Medicaid, were having a harder time; 38% of those hospitals were operating at a loss.

Felzkowski maintained the state needed to place conditions on the flood of new funding and ensure there were measures specifically aimed at lowering the cost of healthcare.

"This was a prime opportunity. When you're giving someone $1.1 billion of new money, isn't that time to negotiate reforms?" she said. "I've been beating this drum for four years, A.J. I'm not stopping now. Of course I'm gonna beat this drum, but that means you have to have a governor who's not in bed with special interests, like the hospitals, to actually sign a reform."

When asked about Felzkowski's comments after signing the budget bill, Evers bristled at the criticism. 

"Yeah, that's bullsh*t. The bottom line is our hospitals are working real hard," Evers said. "The people that work in those hospitals are working real hard. They need our support."

During her remarks on the floor and with reporters after the Senate vote, Felzkowski only criticized Evers, even though the provision was a bipartisan agreement. There have been whispers in political circles Felzkowski is considering a run for governor. A reporter asked the Northwoods Republican whether she was weighing a bid for that office.

"I have no idea," she said.