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Walker Flip-Flops on Health Care Reform

Governor pulls the plug on his own office, forfeits $37 million

Jan. 25, 2012
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In January 2011, one of Scott Walker's first acts as governor was to kill off the Doyle administration's Office of Health Care Reform and replace it with the Office of Free Market Health Care, which was created to implement federal health care reform in Wisconsin according to his liking.

Last week, Walker shuttered his own office and announced the state would no longer lay the ground rules for a health insurance purchasing exchange, as required by the federal Affordable Care Act (ACA)—with it goes a $37 million federal grant to work on the exchange.

Both the Doyle and Walker administrations had worked on laying the groundwork for the exchange, which would allow Wisconsin residents to compare health insurance plans, determine if they were qualified for Medicaid or subsidies for private insurance, and purchase insurance from private companies.

The exchange is especially important for those who have difficulty buying affordable health insurance—individuals, farmers and small businesses—because it would broaden the purchasing pool and allow private insurance companies to actively compete for customers. This is an approach Republicans have claimed to support for the past couple of decades. In this way, health care costs would decrease while more people—especially those who don't qualify for BadgerCare—would have access to affordable insurance.

In abolishing the exchange, Walker is also giving up the state's ability to tailor it to the unique needs of Wisconsin's consumers, health care providers and insurance companies. Although Republicans aren't fans of ACA, the more moderate ones—including Walker's own appointees—argued that Wisconsin should set up the insurance exchange according to our needs, instead of allowing federal policy-makers to set it up. According to ACA, if a state does not submit its plans for an insurance exchange by Jan. 1, 2013, then the federal government will establish it instead.

The Walker administration had expended a lot of time and resources toward implementing ACA in Wisconsin.

State Department of Health Services Secretary Dennis Smith and Insurance Commissioner Ted Nickel had convened groups to work on the exchange; the private insurance industry was heavily involved in them. Last fall, Nickel had backed legislation to implement ACA, which passed the Assembly but died in committee in the state Senate. Smith had made presentations of the framework of the exchange to policy-makers and insurers and had indicated the administration would submit the plan as legislation before the end of 2011.

That never materialized.

State Rep. Jon Richards (D-Milwaukee) is confused by Walker's flip-flop on the insurance exchange.

“The irony is that for so long we've been hearing that they [state Republicans] don't want to have a one-size-fits-all plan for health care,” Richards said. “OK, I agree with that. That's why it was important for Wisconsin to be in control of our own destiny, to create a health care marketplace that suits the conditions of Wisconsin and not Illinois or California or New Hampshire.”

Robert Kraig, executive director of Citizen Action of Wisconsin, said that although federal officials can set up the state exchange, that requires the cooperation of state officials. He said the Walker administration may try to sabotage the exchange by refusing to cooperate.

“That's the next shoe to drop,” Kraig said.

Another unknown is who the president will be in 2013, the ACA-supportive President Obama or a Republican who wants to repeal ACA altogether.

Cullen Werwie, Walker's spokesman, did not respond to the Shepherd's request to comment for this article. The administration issued a press release stating that Walker would sign an executive order repealing his original executive order establishing the Office of Free Market Health Care.

Protecting Insurance Companies' Profits

While fund-raising around the country to defend himself in the recall election, Walker and his administration officials have been busy dismantling health care reform in the state.

In addition to killing off the insurance exchange, the administration has asked the federal government to allow it to force childless adults off of BadgerCare by claiming that the state will have a budget deficit. According to figures requested by Richards, the nonpartisan Legislative Fiscal Bureau found that the state does not have a budget deficit. The administration's budget deficit claim also contradicts Walker's campaign ads, which state that Walker balanced the budget and got rid of the deficit.

“What's so disturbing in this case is that Walker and his administration are so hell-bent on denying coverage for people who need it that they're willing to lie to the federal government and contradict their own TV ads and say that we have a budget deficit,” Richards said.

Insurance Commissioner Nickel also requested a waiver from the federal government to allow insurance companies to disregard the ACA requirement that they must devote at least 80% of customers' premium payments to health care, instead of overhead, profits or salaries. Nickel wants insurers to keep $14 million that should be returned to their customers under that requirement.

The administration has also been mum on its Medicaid plan redesign, which requires federal approval. The administration had threatened to kick 53,000 people off of BadgerCare by July 2012 if it didn't receive a federal waiver by Dec. 31, 2011. The Centers for Medicare & Medicaid Services hasn't given Walker and Smith their waiver and have only allowed them to move forward on a few of their plans.

Then again, Walker's rationale for cutting Medicaid programs is in doubt. Updated figures show that the Medicaid shortfall is $320 million less than what the Walker administration had first estimated when it planned to seek the waiver. Walker and Smith, however, still seem determined to force up to 65,000 individuals off of BadgerCare.


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