By Guy Boulton of the Journal Sentinel
Jan. 1, 2012 |<http://www.jsonline.com/business/states-inaction-on-health-exchanges-concerns-reform-advocates-ud3km6u-136515053.html?page=1>
A recent decision by Gov. Scott Walker could give the federal government greater influence over the state’s health insurance market – and that worries some in the industry.
Walker announced late last month that the state would halt work on the online marketplaces, or exchanges, required under federal health care reform until the U.S. Supreme Court rules on the constitutionality of the law.
The exchanges could help consumers and small businesses compare competing health plans.
They also could increase price competition by requiring health insurers to offer more standardized plans and by providing consumers with better information about what they are buying.
But how well they work will depend on dozens of decisions, such as how much flexibility to give health insurers in determining what to cover, and the roles of insurance agents and brokers.
Under the health care reform law, the state must have a plan in place to set up an effective exchange by January 2013. If it doesn’t, the federal government will set up the exchange.
There’s a risk in halting the work on the exchanges until the Supreme Court rules: If the law is upheld, the state would have only about six months to put together a plan.
Whether that can be done in that time frame is a question. It also is a concern for health insurance companies.”We do not want decisions about Wisconsin’s insurance market to be made in Washington,” said Phil Dougherty, senior executive officer of the Wisconsin Association of Health Plans.
One worry is that health insurers would face stricter regulations from the federal government than from the state Office of Free Market Health Care.”No question,” said Jon Rauser, president of the Rauser Agency, an insurance broker in Milwaukee.
The Office of Free Market Health Care has said it backs a “free-market, consumer-driven approach” for the state’s exchange. Consumer advocates have already criticized the working groups set up to advise the state, saying they are dominated by representatives of insurance companies and brokers.
Walker betting against it
Walker, who opposes federal health care reform, said that moving forward with the exchanges could be a waste of time and effort if the law is declared unconstitutional.
He denied that he was bowing to pressure from conservatives who have encouraged states not to plan for the exchanges.
His decision could be seen as a bet that the revamping of the health insurance market under federal health care reform won’t happen.
Under this scenario, the Supreme Court would declare the entire law unconstitutional – not just the provision that requires nearly everyone to have health insurance – or a Republican candidate would win the presidency in 2012 and be able to stop the law from being implemented.
Walker contends the state still can put together an exchange by the end of next year if the law is upheld.
But that would require the state to make a slew of quick decisions, ranging from arcane details on how to determine the actuarial value of the health plans to what information to provide consumers.”There are a lot of things that have to be worked out and thought through to make it work effectively,” said Barbara Zabawa, a Madison lawyer who is on the main working group to advise the state.
The state could meet the deadline, she said, but it would be a challenge.
Spokesmen for the state Office of Free Market Health Care have not responded to interview requests.
Another potential obstacle is that the state may need to pass legislation to set up an exchange. That would require a special session of the Legislature if the law is upheld.
A lengthy debate on that legislation could further delay work on the exchange. Whether the Walker administration could get lawmakers to pass legislation is also a question.
Sen. Frank Lasee (R-De Pere), chairman of the Senate Committee on Insurance and Housing, has pledged to block legislation needed to set up an exchange.”We can come up with a lot of questions,” said Dougherty of the Wisconsin Association of Health Plans. “But we don’t have a lot of answers just now.”The state also may have to give back at least part of a $37 million federal grant to offset the initial cost of the exchanges.”I don’t know why the feds don’t pull that money, because they are not accomplishing anything with it,” said Bobby Peterson, a lawyer with ABC for Health, a public-interest law firm in Madison. “It’s a shame, because Wisconsin was in a position to be a leader.”At the same time, consumers might fare better if the federal government sets up the exchange rather than the Walker administration, Peterson said.
If nothing else, the governor’s decision adds to the uncertainty surrounding federal health care reform for health insurers.”The uncertainty is the worst part, because it’s hard to plan, it’s hard to budget, without knowing what’s on the horizon,” said Zabawa, the Madison lawyer on the working group.
She was disappointed by the state’s decision to stop work on the exchanges.”Wisconsin would be best served to have its own exchange tailored to the needs of the people of the state,” Zabawa said.
Rauser of the Rauser Agency said even people who oppose the federal law agree with that.”It’s a pragmatic alternative to doing nothing,” he said.
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