Governor Walker’s decision last Friday to defer to the federal government on developing and running a health insurance exchange in Wisconsin didn’t surprise me, but his reasoning did. The reasons he cited may sound persuasive to the general public, but at least a couple of his chief arguments are questionable, at best. A good Capital Times article yesterday pokes a large hole in one of his main arguments (about protecting taxpayers), and an editorial posted on Bloomberg.com yesterday questions the other chief arguments made by GOP governors.
Now that the decision has been made, one could argue that there’s little reason to analyze the decisions made by Walker or other governors, but it’s not a choice that is completely behind us. States that have decided not to develop their own exchange still have until February 15 of next year to propose a state-federal partnership plan, and I hope Wisconsin policymakers will consider that option. In addition, there will be future opportunities for a state to take over operation of a federal exchange and to make changes in its design. The Governor’s rationale for deferring to the federal government boils down to three main points:
- “No matter who sets up and administers the exchange, the federal government makes all the decisions and the final product is the same.”
- States have a number of unanswered questions, and “the federal government’s demonstrated lack of cooperation and detail increases the burden and risk to our state.”
- “The long-term [fiscal] risk to Wisconsin taxpayers is too high.”
The first of those three points is the key to his argument, but most groups that have been closely following this debate disagree with his premise. A wide array of groups asked the Governor to develop a state plan because they concluded that there are design and implementation choices that do make a difference, and they wanted officials who are much more familiar with the state’s insurance market to be making those choices.
Reasonable people can disagree about how much latitude states should have been given in designing the exchanges, but there is little question that there are important choices to be made. Some of the key issues are whether the exchange combines the individual market and small group markets or keeps them separate. Another very important choice is whether there is a single statewide exchange or smaller ones that divide the state into regions. That decision, which will now be in the hands of federal officials, is likely to have a huge impact on which insurers are able to participate and how Wisconsinites feel about the exchange.
Walker’s second point is supported by a long list of questions that GOP Governors sent to Secretary Sebelius a week or so ago, when they asked her for more time to make their decision about whether to develop a state plan. Although I think that portion of the Governor’s rationale is more grounded in facts, I still don’t find it persuasive. The Bloomberg op-ed does a nice job of summing up many of the reasons why I find that argument unconvincing. At the top of that list is the fact that Sebelius responded to the Governors by giving them an additional month (until mid-December) to get more information and make their decision about who would develop the plan for their state.
The third argument – about putting state taxpayers at risk – was the most surprising. It was rebutted by Jessica VanEgeren’s Capital Times article and also by the Bloomberg editorial, which says that states that opt for federal exchanges “wouldn’t save money either, as the federal government is footing the bill for creating exchanges and, under the law, once exchanges are in operation, they are to be self- supporting — through fees paid by insurance companies.”
I think the Governor came close to hitting the mark when he said there is a risk, but in my opinion it’s a different set of risks than what he describes. There’s the risk of alienating some of his supporters who don’t want the Governor to have anything to do with the health care reform law. He might have also cited the risk of not succeeding in establishing an effective exchange. That’s a huge task, and it will be especially difficult in states that haven’t been doing the groundwork for the last two years. As the Bloomberg editorial notes:
“At this point, a state that has done absolutely nothing to prepare probably has too little time to create its own exchange before October 2013, when HHS says it must be ready. Still, there is time enough to join in partnership with HHS; the deadline for deciding to do that is not until mid-February.
“…States have the information they need to move on insurance exchanges. Governors who care about fiscal responsibility, strong state government and the basic welfare of their residents would do well to get with the program.”
Jon Peacock
