Month: October 2024

Yesterday, the Wisconsin Hospital Association Information Center (WHAIC) released its annual Guide to Wisconsin Hospitals for FY2023, which shows Wisconsin hospitals and health systems are continuing to experience financial pressures, compounded by challenges from the previous year. The report indicates a sustained period of low margins and ongoing financial challenges.

Key Findings
Between FY2021 and FY2023, hospitals experienced a 40.8% decrease in their operating margins, with 82 out of 167 hospitals reporting a decline. Fifty-five hospitals—approximately 33% of all hospitals in the state—are now operating at a loss. Health systems also reported a 117.8% decrease in operating margins, reaching -0.8% in FY2023.

Safety net hospitals, which serve populations with higher Medicaid coverage, are also reporting losses. In FY2023, 38.1% of Wisconsin’s safety net hospitals—32 out of 84 such facilities—reported financial losses, up from 33.7% in the previous year.

Additionally, hospitals are dealing with rising costs. Supply and service costs have increased by 16.6% since FY2021, while salary and fringe expenses have increased by 11.3%, largely due to workforce shortages.

Emergency department utilization has also increased, with nearly 2.4 million visits in FY2023, a 13.5% increase from FY2021.

Gross domestic product, a measure of all the goods and services produced during the three-month period from July through September, increased at a 2.8% annualized rate, according to a Commerce Department report Wednesday that is adjusted for inflation and seasonality.

Personal consumption expenditures, the proxy for consumer activity, increased 3.7% for the quarter, the strongest performance since Q1 of 2023. Another major factor the department cited for growth was federal government spending, which exploded higher by 9.7%, pushed by a 14.9% surge in defense outlays.

However, an 11.2% jump in imports, which subtract from GDP, held back the growth number and offset an 8.9% gain in exports.

The report confirms that the U.S. expansion has continued despite elevated interest rates and long-standing worries that the burst of fiscal and monetary stimulus that carried the economy through the Covid crisis wouldn’t be enough to sustain growth.

However, resilient consumer spending, which accounts for about two-thirds of all activity, has helped keep the economy moving, as has a relentless wave of government spending that pushed the budget deficit to more than $1.8 trillion in fiscal 2024.

The number of annual union petitions in the state has more than doubled in recent years, suggesting interest in unionization is on the rise even as the share of Wisconsin workers in unions has fallen substantially.

Wisconsin had a total of 47 union petitions filed with the National Labor Relations Board in fiscal year 2024, which ran from Oct. 1, 2023 to Sept. 30, 2024. That marked a 114% increase since fiscal year 2021, when 22 petitions were filed. That number was 28 for fiscal year 2022 and 25 for fiscal year 2023.

The increase in Wisconsin is part of a regional trend, the NLRB figures show. Midwest states had a 138% increase in union petitions over the same period, which is the highest percentage increase of any region in the country.

By percentage, Wisconsin is on the low end for these increases: Ohio had a 226% increase; Indiana had a 187% increase; Michigan saw a 160% increase; and Minnesota had a 124% increase. Among nearby states, only Illinois had a smaller percentage change with 95%.

Filing a union petition with the NLRB is just the first step toward unionizing, and the process of moving from an election to signing a contract with an employer often results in “a pretty substantial waiting game,” Dresser said. Despite the interest indicated by the rise in petitions, she noted the share of unionized workers in the workforce has actually been declining.

Between 2000 and 2021, the percentage of employed Wisconsinites in unions plummeted from 17.8% to 7.9%, putting the state below the national average of 10.3% for the year. That’s according to a Wisconsin Policy Forum report from 2022 documenting the decline of unions in the state.

Ben Straka, research and government affairs associate for the Washington-based conservative think tank Freedom Foundation, argues the NLRB union petition data “don’t bear out the picture that union leaders and their allies in government would like to paint.” He also noted union membership rates continue to decline.

“What’s arguably more interesting than the total number of filings touted by (President) Biden’s NLRB is the frequency of employee decertification efforts that the current administration has actively made it harder to pursue,” Straka said in an emailed statement. “Over the past eight years, for every three attempts made by unions to organize workers in Wisconsin, there’s been at least one attempt by employees to change or get rid of their union.”

The state Legislature could consider several proposals to revamp the Universities of Wisconsin system, including spinning off the University of Wisconsin-Madison and increasing tuition.

Since July, a legislative committee has been meeting to look at the future of the state’s public university system.

The result is nearly two dozen proposals that range from limiting programs offered at UW campuses to eliminating the UW-Madison chancellor position.

On Thursday, the legislative committee met for several hours to go over the proposals and decide which ones to forward onto the Legislature for further discussion.

Any change to the UW system’s structure requires legislative approval. That would happen when the session begins next year.

The 18-member committee includes two Democratic lawmakers, two Republican lawmakers and 14 others.

Several members have said they support spinning off UW-Madison as a way to lift up the other campuses and allow the flagship university to compete on a more national level.

But Chancellor Jennifer Mnookin and system President Jay Rothman are opposed to the idea.

Beginning November 1, residents in nearly every county across Wisconsin will have the opportunity to choose from at least three different health insurance carriers on HealthCare.gov. Wisconsin has one of the most competitive individual health insurance markets in the nation with fifteen insurers participating in plan year 2025. An interactive map of health insurers available by county can be found here.

The bipartisan Wisconsin Healthcare Stability Plan (WIHSP) has also helped keep rates low for consumers every year since its implementation. In 2022, rates were 14.5% lower and in 2023, rates were 13.7% lower than they would have been without WIHSP.

Rates on HealthCare.gov would have increased by 19.5% for the 2025 plan year, based on a weighted average. Thanks to WIHSP, rates on the individual health insurance market in Wisconsin will instead increase by a weighted average of 8.2% for the 2025 plan year.

Visit WisCovered.com to learn about coverage options before the 2025 Open Enrollment period opens on November 1. Consumers are also encouraged to speak with a licensed insurance agent or broker, or call 2-1-1 to get connected with a navigator to learn more.

The National Association of Realtors (NAR) on Wednesday reported that existing home sales declined 1% in September from the prior month to a seasonally adjusted annual rate of 3.84 million, which is a 3.5% drop from one year ago.

At the same time, the median sales price of existing homes jumped 3% from last September to $404,500, marking the 15th consecutive month of year-over-year price increases, the NAR said. The inventory of unsold existing homes, which includes single-family homes, townhouses and condominiums, rose by 1.5% in September from the prior month to 1.39 million.

“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” said NAR chief economist Lawrence Yun. “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy.”

Holden Lewis, a home and mortgage expert at NerdWallet, attributed the decline in existing home sales to a combination of rising mortgage rates and home prices that have pushed the prospect of a home purchase out of reach for more Americans amid an affordability crisis.

The Internal Revenue Service announced today the annual inflation adjustments for tax year 2025. Revenue Procedure 2024-40 PDF provides detailed information on adjustments and changes to more than 60 tax provisions that will impact taxpayers when they file their returns in 2026.

The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts:

• Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2024, an increase of $600 from the amount for tax year 2024.
• Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
  • 35% for incomes over $250,525 ($501,050 for married couples filing jointly).
  • 32% for incomes over $197,300 ($394,600 for married couples filing jointly).
  • 24% for incomes over $103,350 ($206,700 for married couples filing jointly).
  • 22% for incomes over $48,475 ($96,950 for married couples filing jointly).
  • 12% for incomes over $11,925 ($23,850 for married couples filing jointly).
  • 10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
• Alternative minimum tax exemption amounts. For tax year 2025, the exemption amount for unmarried individuals increases to $88,100 ($68,650 for married individuals filing separately) and begins to phase out at $626,350. For married couples filing jointly, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.
• Health flexible spending cafeteria plans. For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660, increasing from $640 in tax year 2024.
• Medical savings accounts. For tax year 2025, participants who have self-only coverage the plan must have an annual deductible that is not less than $2,850 (a $50 increase from the previous tax year), but not more than $4,300 (an increase of $150 from the previous tax year).

  The maximum out-of-pocket expense amount rises to $5,700, increasing from $5,550 in tax year 2024.

  For family coverage in tax year 2025, the annual deductible is not less than $5,700, increasing from $5,550 in tax year 2024; however, the deductible cannot be more than $8,550, an increase of $200 versus the limit for tax year 2024. For family coverage, the out-of-pocket expense limit is $10,500 for tax year 2025, rising from $10,200 in tax year 2024.

• Estate Tax Credits. Estates of decedents who die during 2025 have a basic exclusion amount of $13,990,000, increased from $13,610,000 for estates of decedents who died in 2024.
• Annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.
• Adoption credits. For tax year 2025, the maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,280, increased from $16,810 for tax year 2024.

The Biden administration rang up a budget deficit topping $1.8 trillion in fiscal 2024, up more than 8% from the previous year and the third highest on record, the Treasury Department said Friday.

Even with a modest surplus in September, the shortfall totaled $1.833 trillion, $138 billion higher than a year ago. The only years the U.S. has seen a great deficit were 2020 and 2021 when the government poured trillions into spending associated with the Covid-19 pandemic.

The deficit came despite record receipts of $4.9 trillion, which fell well short of outlays of $6.75 trillion.

Government debt has swelled to $35.7 trillion, an increase of $2.3 trillion from the end of fiscal 2023.

Interest expense for the year totaled $1.16 trillion, the first time that figure has topped the trillion-dollar level. Net of interest earned on the government’s investments, the total was a record $882 billion, the third-largest outlay in the budget, outstripping all other items except Social Security and health care.

The average interest rate on all the government debt was 3.32% for 2024, up from 2.97% the previous year, a Treasury official said.

As a share of the total U.S. economy, the deficit is running above 6%, unusual historically during an expansion and well above the 3.7% historical average over the past 50 years, according to the Congressional Budget Office.

Consumer spending held up in September, underscoring a resilient economy that is now getting a boost from the Federal Reserve, the Commerce Department reported Thursday.

Retail sales increased a seasonally adjusted 0.4% on the month, up from the unrevised 0.1% gain in August, according to the advance report. Excluding autos, sales accelerated 0.5%. The numbers are adjusted for seasonal factors but not inflation, which rose 0.2% on the month as measured by the consumer price index.

On the retail side, spending grew at miscellaneous store retailers, which showed an increase of 4%, as well as at clothing stores (1.5%) and bars and restaurants (1%). Those increases offset a 1.6% drop at gas stations as fuel prices fell, along with declines at electronics and appliances stores (-3.3%) and furniture and home furnishing businesses (-1.4%).

Sales increased 1.7% from a year ago, compared with the CPI rate of 2.4% for the same period.

Yesterday, the Wisconsin Department of Administration (DOA) announced the state of Wisconsin ended Fiscal Year (FY) 2024 with a positive balance of $4.6 billion. In addition, the state saw its ‘rainy day’ fund (Budget Stabilization Fund) increase to a record-high $1.9 billion, according to the new Annual Fiscal Report released by DOA.

“We’re proud of the prudent fiscal management that the state of Wisconsin continues to demonstrate under the guidance of Gov. Evers, year in and year out,” said DOA Secretary Kathy Blumenfeld. “Ending the year with a healthy reserve and record high rainy-day fund positions us well for the future and being able to respond to the needs of the people of Wisconsin.”

The full FY 2024 Annual Fiscal Report, which ended on June 30, 2024, is available here, and noteworthy items include:

• The state’s undesignated general fund balance at the end of FY 2024 was $4.6 billion. While the ending balance is $821.3 million higher than estimated, budget figures for FY 2024 included a $423.3 million transfer from the state General Fund to the Capital Improvement Fund that will occur in FY 2025.
• The current Budget Stabilization Fund balance increased to $1.9 billion, the largest figure in the state’s history and over $1.5 billion higher than the balance at the end of FY 2018.
• State general fund tax collections in FY 2024 increased by 1.7 percent over the prior year and were 1.3 percent higher than estimated.