The Anti-Health Care Governor?

If you were looking for a demonstration of how unwilling Gov. Scott Walker is to compromise on the issues, look no further than his opposition to fashioning a state-designed health insurance exchange to implement Obamacare.

Nearly every major interest group in the state wanted him to do this, from labor unions to the Wisconsin Manufacturers and Commerce and National Federation of Independent Businesses. All the major medical groups favored this, including the Wisconsin Hospital Association, Wisconsin Medical Society and Wisconsin Association of Health Plans.

The issue seems like a no-brainer. The health insurance exchanges are expected to lower the typically prohibitive costs for small businesses and for individuals who lack group health insurance by maximizing their market power, creating a new pool of customers who would make their purchases through the state-run exchange.

But the structure of these exchanges could vary from state to state. “Some states have one or two carriers that provide 60 percent of all insurance coverage,” says Phil Dougherty, senior executive officer of the Wisconsin Association of Health Plans.  “In Wisconsin it would take 18 or 19 plans to get up to 60 percent of coverage. Our strength is the number of health plans.”

For that reason, Dougherty told the Associated Press, his group supports a state-run rather than federally facilitated exchange. “We think that would put Wisconsin in the best position to preserve and build on the strengths of a strong, competitive market.”

Walker claims there could be added costs for Wisconsin with a state-organized program but couldn’t detail any costs when asked by the Milwaukee Journal Sentinel. Experts note the exchanges are self-funded, through an assessment on the insurance companies.

Why would Walker go against the wishes of major business and health care groups in Wisconsin on this issue? Politically, he may be positioning himself as a candidate who can win the Republican primary for President in 2016, where opposition to Obamacare would be rewarded. Policy-wise, Walker has been erratic in his approach to health care.

Soon after he was elected, Walker chose Dennis Smith to run the state Department of Health Services. As a member of the administration of President George W. Bush and later as a senior fellow at the conservative Heritage Foundation, Smith had a draconian view of government subsidized health care.  He wrote a piece urging states to drop out of Medicaid, and was well-known nationally as a critic of Obamacare.

Meanwhile, Walker faced a situation that has confronted every governor for two decades: in the last 20 years the Medicaid rolls have increased about 10 times faster than the state’s population. Like other governors, Walker was forced to increase health care spending, but he also looked for ways to restrict eligibility. Last year, the Walker administration proposed a change in Medicaid that would have slashed coverage for low-income recipients while sparing the elderly and disabled.  A single parent with two children and an income of, say, $28,000 a year, would have seen the annual premiums rise from $120 to $1,390. If the parent failed to keep up with the premiums, the family would be dropped from the program. The non-partisan Legislative Fiscal Bureau estimated some 65,000 people would be pushed out of the program.

As it turned out, the Obama administration did not approve the proposal, instead requiring that coverage for children must be continued, which reduced the number dropped from the program to 17,000.

Meanwhile, the waiting list for the state’s BadgerCare Plus Core Program, which covers only adults, in particular adults without dependent children, has continued to increase while coverage has declined. By June, there was a waiting list of 130,000 people for this program. As a result, Legal Action of Wisconsin sued the state Department of Health on behalf of two Milwaukee women who had been on the waiting list for more than two years.

The Walker administration has argued there is no money in the budget to expand coverage of BadgerCare Plus Core, which at the time covered 26,000 people. But Jon Peacock, research director for the Wisconsin Council on Children and Families, says the legislature had allocated enough money to cover 34,000 people.

The number of people covered continues to drop, Peacock says. “As of the end of October, there were 15, 909 people covered.” Meanwhile, Peacock says the waiting list continues to grow and now numbers 143,000 people.

Even as his administration has reduced health care coverage, Walker has done everything possible to oppose Obamacare, though it has tremendous potential to extend health care coverage to more people while lowering health care costs for Wisconsin. A study by the Urban Institute found that on balance (with all added costs and savings included) Obamacare would lower costs for Wisconsin by about $3.5 billion from 2014 to 2019.

Major reasons that costs will be reduced include: (1) health care exchanges will reduce costs of insurance for individuals and small businesses; (2) extending coverage to those without insurance will reduce their use of expensive emergency room care and increase their use of preventive care; (3)provisions that require insurance companies to lower their administrative costs will lower overall costs; (4) As private insurance becomes more affordable, some people now covered by Badgercare could transition to private insurance.

And even while lowering costs, Obamacare would extend coverage to an estimated 340,000 Wisconsinites who now lack insurance.

A Legislative Study Committee was convened in 2010, with representatives of health care organizations in Wisconsin, to begin planning for the implementation of Obamacare. As soon as Walker was elected and the Republicans took control of the legislature, the committee was disbanded.

“We were actually a meeting or two away from recommending an exchange and what the exchange might have looked like,” says state Sen. Jon Erpenbach (D-Middleton). “And they disbanded the committee. It’s frustrating.”

Walker also turned down $38 million from the federal government to help implement the health insurance exchanges. As with high speed rail, Erpenbach notes, that money is likely to go to other states, like Minnesota, whose implementation grant was increased.

“It’s money to do the groundwork for a state-run exchange,” says state Rep. Jon Richards (D-Milwaukee). “It could pay for computer systems, enrollment systems, that would allow people to go online and see your options and make a choice.”

Peacock predicts a federally-run health insurance exchange will not work as well: “I don’t think they’ll be able to fashion it to meet every state’s unique needs. They have to dovetail federal computers with state computers. The health insurance exchange will be less effective here than the Massachusetts one or those in the states that worked proactively on this.”

Robert DeVita, CEO of the Common Ground Health Care Cooperative based in Milwaukee, which was created to help small businesses get insurance coverage, says the Massachusetts health insurance exchange is a marvel: “You can go online and get information. It’s like buying airline tickets from Travelocity or Expedia. Businesses and individuals love it.”

The fact that more than a dozen states have chosen not to create their own health insurance exchanges could hamper the implementation of Obamacare, Peacock says.  “I don’t think Congress envisioned this many states saying we won’t do our own exchanges. It’s a huge amount of work for the federal government.”

DeVita looks at health care problems from a business standpoint. “I sit on a panel that judges business plans at the UWM School of Business. We see some wonderful ideas, but the biggest impediment to these entrepreneurs starting a new company is the cost of health insurance. They can’t afford to leave their current job where they now get coverage.”

Clarification: An earlier version of this story, while it was factual, was quite misleading: it left out the fact that health care spending under Walker actually increased. My apologies for the omission.