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Curmudgeon's Corner

cur-mud-geon: anyone who hates hypocrisy and pretense and has the temerity to say so; anyone with the habit of pointing out unpleasant facts in an engaging and humorous manner

Walker Chooses Federal Exchange Approach

Wisconsin, U.S., Quality of Life, Healthcare, Employment, Taxes

The decision by Governor Walker to avoid committing Wisconsin to developing a ‘state-run’ health plan exchange has drawn fire from both sides of the equation.  As a disclaimer, I am a licensed health insurance agent/broker working with employers.  I have had a lot of opinions about various aspects of ObamaCare and much of that has appeared in this blog before, so my general opposition is on record.

There were three options available to the Governor so far as the requirement that each state make available an exchange for its population to make use of in selecting a health plan if they were not already covered under an employer-sponsored plan.  Those three options were labeled as state-run, federally-run or a combination of a federal-state version.  My compatriots were divided into three camps: no exchange because it would be threatening to us; a state-run exchange because it would give the state flexibility in how it would be run; and, the combination exchange approach because it would involve federal money while the state supposedly would have some authority, as well.

The outcome has satisfied some and dissatisfied others.  This was among those decisions we label as ‘damned if you do, and damned if you don’t’.  Governor Walker chose to go the route of telling the feds that Wisconsin wasn’t going to use either the state or combination options, and is drawing objections for having made that decision.

I believe that there is truth to the following assumptions that I presume drove the Governor’s decision:

1.      Had a Wisconsin-driven exchange solution been chosen, the federal government was going to dictate the plans that would be available and would’ve off-loaded the costs of the exchange almost entirely on the state.  Those costs are unknown at this point but I expect they’ll be quite significant given the cost of building and operating exchanges such as have existed in Utah for years.

2.      Had a federal/state solution been chosen, the federal government was going to dictate the plans that would be available and would’ve still been in the top dog position since it would be controlling state decisions through the federal ability to influence decisions by withholding funding if it chose to do that, thus forcing the state to do as the feds wished it to do.

3.      Had the Governor done what he finally decided to do, the federal government would be required to build a Wisconsin-centric exchange and retain the financial consequences of building and operating the exchange for itself, and will do whatever it wants to do anyway just as it would’ve in either of the other two options.

That having been said, we have ObamaCare and there is little likelihood that will change in our lifetimes other than by tweaking every once in a while as costs threaten to devour the concept.  We have begun to experience what some had warned us about.  Employers are now looking at the plans they sponsor versus the plans the exchange would offer to their employees.  Employers will make whatever decision they make based on the economics of that decision, and we’ve seen that beginning to unfold.  Employers will be scolded, but most will have made their decisions as best they could from the terrible choices from which they had to choose.

Some employers will end their sponsored plans because the fines, if any, will be far less costly than the premium share would’ve been.  Smaller employers will be the ones forced into that Hobson’s choice because they could actually be forced out of business by high health plan costs in many cases.  Mid-sized employers will be split with some finding that continuing a sponsored plan will be more cost-effective than ending the plan and paying the fines that accrued.  Larger employers will move in greater numbers to self-insured plans since those fall under the law we call ERISA and thus have some breaks that are otherwise not available to plan sponsors of insured plans.  In general, the costs we pay for virtually everything will reflect the increase in health care costs.

We will see doctor shortages, that already exist, exacerbated as more and more graduating physicians go into specialties rather than to deliver primary care.  We will see other young qualified people choose a field other than the practice of medicine that will permit them to excel in their careers.  We will see younger people paying a greater share of the medical costs of older people through the rejiggering of rate structures as discussed in an earlier blog.  We will see the discovery cycle that improves our health hindered given the costs leveled on that industry to help fund ObamaCare.

The federal government will see its budget deficits continually increasing since the costs of delivering on the promise of ObamaCare will hit home at that level, as well.  That implies increased taxes.

Governor Walker probably made the best of the decisions he had available to him, but he was going to take flack no matter the choice he made.

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