Wisconsin

Obama Administration Proves No Flexibility Exists in ObamaCare

Policy

By: Brian Sikma

Any hope that states could outsmart ObamaCare by striking a deal with the Obama Administration has been fast disappearing in the face of repeated inflexibility on the part of the Administration. Wisconsin, which has so far decided to avoid voluntary compliance with ObamaCare, saw its request for a waiver on the so-called 80-20 rule refused this week. The rule, which mandates that health insurance providers spend at least 80% of premiums on payouts for care (leaving only 20% for operating costs), severely curtails the ability of insurance providers to manage their operations in a way that most benefits their own consumers.

Wisconsin requested permission to phase in the new rule over time because several insurance companies that provide health insurance in Wisconsin need time to adjust their operations to comply with the mandate. The decision this week means that insurance providers need to immediately adjust their operations (something that could include firing some workers) or leave the Wisconsin market. Opponents of the waiver request, and proponents of the heavy-handed rule, cheered the Obama Administration’s decision as a victory for consumers over insurance providers. According to the Milwaukee Journal Sentinel, ABC for Health, a Madison group, heaped praise on the decision saying it is “a win for Wisconsin consumers.”

What advocates of the rule don’t understand is that health insurance providers, in order to provide competitive services to consumers, need to be free to establish their own payout guidelines. Providers that may provide their consumers with outstanding levels of service, but are not compliant with a dreamed-up income/payout ratio, will be forced out of business. For some, that simply means that only the most competitive and competent insurance companies survive. But in reality shutting down insurance providers and destroying the options available for consumers will, over the long-term, not lead to a more efficient industry. Rather, markets will be faced with a declining number of insurance providers, and the providers that are left will become, in essence, an extension of the federal government because significant aspects of their operation will be controlled by non-negotiable regulations.

Price fixing has never been found to work in the long-term interests of consumers in any industry, and now Wisconsin’s health insurance industry is going to experience that lesson first hand.

After the legislature and Walker Administration decided to cancel the state’s planned compliance with ObamaCare (which was premised on the idea that Wisconsin could tell Washington what it wanted to comply with and how it wanted to comply – something disproven by this wavier refusal), legislators began to take action to keep Wisconsin law and regulations free from the unnecessary and potentially costly compliance effort. State Rep. David Craig (R) and State Sen. Leah Vukmir (R) have introduced two separate bills relating to ObamaCare. One measure would require future compliance efforts to come from the legislature, not any part of the executive branch acting alone, and the other would mandate that state agencies submit reports to the legislature detailing ObamaCare’s impact on Wisconsin.

Unless ObamaCare is repealed, struck down, or otherwise rolled back, expect to see more decisions in the future that undermine patient choice in Wisconsin by eliminating the options available to consumers in the health insurance marketplace.

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