Wisconsin

Wisconsin’s Voluntary Compliance with Obamacare

Policy

By Brian Sikma

Just months after standing up to powerful special interests and a long-standing status quo that pitted insider bullies against Wisconsin citizens, the GOP-controlled state government is moving to voluntarily comply with the biggest healthcare blunder in history. This week, the Assembly could vote on AB 210, a bill that would overhaul Wisconsin’s health insurance regulations and bring them into compliance with the big government mandates backed by President Barack Obama and liberal ideologues in Washington.

Specifics

AB 210 effectively embraces the consumer-harming regulations found in the euphemistically named federal Patient Protection and Affordable Care Act (PPACA) and places them in Wisconsin state law. Among some of the bill’s more egregious provisions are mandates controlling the type and extent of coverage that insurance plans provide, prohibitions against cost-saving, premium reducing elements found in some plans, and expanded development of yet another layer of compliance control. Another provision requires that all insurance rate changes be pre-approved by the government, thereby denying consumers rates that are based on market pressures.

Health insurance exchanges are not a part of this compliance measure. Establishing an exchange that complies with Obamacare requirements is left for another bill, but the regulatory overhaul accomplished by the present bill lays the foundation for such an exchange. Originally, it was left to the executive branch to determine what a Wisconsin Obamacare exchange would look like. The revised proposal that is included in AB 210 states that the legislature must sign off on any state-initiated attempts to voluntarily impose an exchange system that adheres to federal mandates.

Advocates

Supporters of AB 210, according to records from the Assembly Committee on Insurance, range from Dan Schwartzer the recently appointed Deputy Commissioner of Insurance, to lobbyists for big insurance companies like Anthem Blue Cross/Blue Shield and smaller insurance trade groups. Among the opponents listed was the liberal group Citizen Action of Wisconsin.

That insurance companies would favor a bill that increases the amount of regulations they must contend with might seem confusing at first. But these companies understand that although they indeed will be penalized to some extent under Obamacare and its implementation at the state level, by establishing themselves early under the new structures, they will have a competitive advantage over other insurance providers. Additionally, insurance companies will benefit from subsidies that would come through an exchange system that is established on the foundation of the new regulations. So while consumers will be left to bear the consequences of policy failures, insurance companies are keen to leverage their political clout now to enrich themselves later on.

Such an outcome is truly an irony considering all the pro-consumer rhetoric attached to the Affordable Care Act.

Sunset

The committee-passed version of AB 210 includes greater sunset provisions than were originally proposed. If all or part of the Patient Protection and Affordable Care Act is declared unconstitutional and unenforceable in Wisconsin, or if Congress repeals all or part of the law’s provisions, the corresponding laws and regulations in Wisconsin would immediately have no effect.

But two important questions are unanswered by this particular sunset provision. What happens if a federal court does not specifically hold Obamacare unconstitutional and unenforceable in Wisconsin? Does a federal ruling have to specifically target Wisconsin in order for the clause to take effect? States have properly and traditionally had the right to establish insurance regulations. It is conceivable that this Obamacare compliance law could have been passed in a different time, and without a federal mandate, and still be perfectly compatible with the role of state government (other policy objections aside). In conjunction with other concerns, a major argument in opposition to PPACA is that it is not the role of the federal government to insert itself in this way into the affairs of states. Tying a sunset provision to a narrow range of options for a federal court ruling increases the chances that Wisconsin will be stuck with unnecessary health insurance mandates even if Obamacare is struck down either in whole or in part.

A second concern is what happens if Congress chooses to defund all or part of PPACA’s provisions without explicitly repealing any particular provisions. The defunding of Obamacare has been bantered about as an idea that could be used as an intermediate step between leaving it in place and completely repealing it. Defunding Obamacare could cut off a subsidy that states use to establish exchanges based on the kind of regulatory modifications found in AB 210, and could limit the ability of the federal Health and Human Services agency to enforce state-implementation of PPACA. Such a move should be met with some consequence here in Wisconsin and business as usual under the new regulatory regime should be disrupted.

Alternatives

Proponents of AB 210 say that passage is critical to protecting the role of the state in health insurance policy and that the bill offers Wisconsin a narrow shot at “improving” bloated federal mandates. Both well-meaning arguments are misguided.

Think tanks around the country have observed that states have almost no chance whatsoever at improving Obamacare mandates. The idea, promoted by the Obama administration, that states have a range of flexibility in developing compliance measures to the Affordable Care Act is a mirage. If the federal government does not like how a state chooses to implement PPACA mandates, it is free to override the state reforms and impose its own set of policies. Make no mistake; the Obama administration is not in the business of empowering free market ideas and any legislator or administration official that seriously believes Wisconsin has a chance at “improving” PPACA is tilting at windmills.

Although present in name, the federalism argument has no substance to it. Federalism recognizes that the power of the federal government is specific and limited, and the states have the freedom to create their own means of fulfilling the responsibilities that are rightfully theirs. Obamacare mandates do not offer states a real choice. Instead they offer a false choice between complete voluntary compliance and complete involuntary compliance. The end result is the same. The difference is a matter of whether or not states wish to actually assert their prerogatives and courageously oppose the federal government by forcing Washington to impose its will, or simply surrender their prerogatives and voluntarily bind themselves to a failed system.

Since full compliance in all the substantial matters of PPACA is the only thing accepted by Health and Human Services, the agency tasked with overseeing the imposition of PPACA, legislators and other state policymakers do not have a real choice in determining policy. In fact, by passing a measure like AB 210 they serve only to legitimize poor policy decisions at the federal level. As much was recognized when HHS Secretary Kathleen Sebelius told a publication that Florida’s Governor Rick Scott (R), an opponent of implementing PPACA at the state level, didn’t really have a genuine choice in the matter.

“The irony in the way the law is written is that if Governor Scott chooses in Florida not to move ahead, the Affordable Care Act directs the Department of Health and Human Services to [implement it]. So the citizens of Florida will have the advantage of an exchange, they will have the same kind of rules that we just talked about.”

As state attorneys general, including Wisconsin’s own J.B. Van Hollen, wage a legal challenge to PPACA’s most glaring fault – the individual mandate – passage of foundational compliance legislation undermines the argument that they are trying to make. As the Supreme Court prepares to take up the matter, it does not aid the legal challenge when states say on the one hand they oppose PPACA as a matter of principle but then turn around and voluntarily comply with its mandates.

State policymakers stand no chance of creating a genuinely free market compliance system. They are forced to comply either voluntarily or involuntarily with Washington’s dictates. Voluntary compliance shares ownership for a failed federal plan between liberal policy makers in the Obama administration and Congress and state legislators and administration officials. Obamacare is a bad idea and it should remain the sole responsibility of the administration that sought its passage.

The best thing that legislators could do if they are truly interested in promoting free market ideas and protecting 10th Amendment federalism is to reject any measure that voluntarily surrenders to the federal Patient Protection and Affordable Care Act. The belief that PPACA can be “improved” has no ground in fact and ownership for PPACA’s failures should not be spread to the state level. The unintended consequences and known dangers of measures like AB 210 should offer a strong warning to would-be supporters.