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Will the Real Dennis Smith Please Stand Up?
Written by Jeff Horn   
Monday, 19 December 2011 23:01

On August 24, 2011 Wisconsin Department of Health Services (DHS) Secretary Dennis Smith announced on Wisconsin Radio Network "We're already well under way designing an exchange that is uniquely Wisconsin!".  His reasoning?  Secretary Smith cited an actuarial study that indicated that health insurance rates in Wisconsin would skyrocket under PPACA and that if Wisconsin did not design it's own health insurance exchange, the federal government would swoop in an impose a federal exchange on Wisconsin.  In that same radio interview, Dennis Smith indicated:

"If there's a federal exchange, I believe we will see a consolidation in the marketplace which will drive costs higher.  We believe we need to preserve Wisconsin's competitive marketplace and design new ways in which we can increase competition even further to mitigate against these increased costs."

It's true.  Wisconsin currently enjoys one of the most competitive health insurance marketplaces in the nation.  It has 32 insurers that provide individual health coverage and 25 insurers that provide group coverage.  Compare this to a state like Maine that has only two health insurance providers for residents to choose from. 

Secretary Smith is right to be concerned because Wisconsin has so very much to lose as PPACA regulations go into effect.  PPACA will mandate minimum coverage levels which will outlaw many policies written in Wisconsin aimed at providing minimal or catastrophic coverage at a very low cost.  Wisconsin has several small insurers who specialize in such coverage.  They will be unlikely to continue with their current business plan in the years to come.  Exchange or not, they will be squeezed out of the market place. 

Wisconsin also has insurers specializing in so called "Cadillac Plans" which provide excellent coverage with minimal co-pays and deductibles, but which cost a premium in terms of rates.  PPACA will put pressure on these plans by dictating maximum rates for plans.  Insurers offering these products will necessarily need to discontinue them or raise co-pay and deductible requirements.  Over time, they will start to look like every other policy.  Insurers that mainly deal with such policies will also be squeezed out of the market.

On the Wisconsin Radio Network, Secretary Smith indicated his concern: 

"We're very concerned about how heavily that exchange is regulated and hopefully we can get relief on that." 

The state has applied for several waivers to get just such relief and surprise, surprise, no relief has come!

So for secretary Smith, it seems that 'Plan B' is to build a health insurance exchange that uses a free market approach to keep costs down. That all sounds well and good, but the fallacy is that any government exchange, whether run by the state or the feds, can even be a free market. Partnering business and government always results in a regulated market, picking winners and losers, and price fixing--in short, a cartel (aka crony capitalism).  Moreover, the "state exchanges" are the federal plan to implement Obamacare; so Wisconsin's exchange is a federal exchange, no matter how Secretary Smith wants to slice it.  Unless PPACA is overturned in court or repealed, we'll end up with an insurance industry that looks very much the same in every state. Some states will use health insurance exchanges run by state officials. Some will use exchanges run by federal officials.  For citizens, however, the experience will be more or less the same: Very similar plans offered at very similar prices provided by very few companies subsidized by shifting money from those who earn more to those who earn less.

If you don't believe me, all you have to do is read what Secretary Smith had to say about PPACA and health insurance exchanges in 2010, before Governor Walker appointed him Secretary of DHS.  In his previous role at the Heritage Foundation, Dennis Smith writes:

"The extent to which PPACA reduces the role of the states, with official Washington creating the impression that states are neither valued nor needed, is alarming.  Throughout this new federal law runs a constant theme that authority of the sovereign states can be overridden by the Secretary of the U.S. Department of Health and Human Services (HHS) or replaced by some nonexistent not-for-profit organization."

Though Smith currently hopes for "flexibility from HHS" he has clearly expressed his opinions elsewhere that indicate his understanding that HHS doesn't value or need Wisconsin.  For HHS, Wisconsin's authority for running an exchange can be overridden or replaced on a whim.  Flexibility is very unlikely to come from an administration that values the role of states so little.

Wisconsin has accepted $38 million in Early Innovator Grants to help develop it's health insurance exchange.  It's an unfounded hope that money provided by HHS to help setting up a Wisconsin state health exchange comes with no strings.  In his Heritage Backgrounder, Smith writes:

"New Strings Are Attached.  The new federal funds come with yards of strings attached that threaten to strangle states.  States need to consider whether benefits outweigh the costs if they participate.  This begins with explaining to the public what those strings are." 

So where is the explanation, Secretary Smith?  We haven't seen you tearing up the airwaves explaining all the strings!  Have you, in fact, decided that the benefits outweigh the costs?  Wisconsin has so much to lose should PPACA become law.  With every step we take toward implementing an exchange Wisconsin harms its case against PPACA in the Supreme Court!  In a recent letter announcing the rescission of an emergency rule that had brought Wisconsin into compliance with PPACA regulations, Governor Walker noted that he had

"some concerns regarding the unintended impact the implementation of WI INS 18 Emergency Rule may have on our ability to prevail in overturning this law in the United States Supreme Court". 

How much more impact will Secretary Smith's directing of DHS to implement a PPACA compliant exchange impact Wisconsin's court case?

In his 2010 Heritage article, Smith asks:

"If the Secretary of HHS runs the exchanges, for whom do state insurance commissioners work - the people who elected or appointed them to office or the federal government?" 

He all but admits that though the players may change, the game remains the same.  Officials running an exchange may work for Wisconsin, but they are effectively indistinguishable from their federal counterparts.  Wisconsin's insurance commission and health services will become arms of the federal government.  To Wisconsin residents, health insurance exchanges will not be greatly different from exchanges in other states.  Though run by people in Madison, exchanges will soon feature the same old government-issued, one-size-fits-all health care you can get anywhere in the nation.

In the Heritage article, Smith goes on to state that

"When governors and state legislators realize that they have been reduced to mere agents of and tax collectors for the federal government, bipartisan opposition from the states will be inevitable." 

Yet DHS is still full speed ahead on implementing a state exchange.  Smith clearly knows the risks and should be ringing the alarms to the governor and legislators about the danger of the looming HHS takeover of Wisconsin's insurance industry.

He knows that playing the federal game is not a winning strategy.  Smith, in his Heritage backgrounder, points to a possible solution:

"States have to agree to federal terms that are as yet undefined.  On the other hand there is no financial risk to not participating in this temporary program." 

If Wisconsin agrees to play the HHS game, where HHS holds all the cards and has the power to make up it's own rules, then Wisconsin loses, plain and simple.  However, if Wisconsin stands up and refuses to implement an exchange, the Feds will be forced to implement one for us.  To put it in Smith's own words from 2010: 

"If HHS chooses to micromanage each particle of the exchanges, failure is all but guaranteed."

In 2010, Dennis Smith suggested four ways in which states could fight PPACA:

  1. "Make federal officials explain themselves in broad daylight."  Why hasn't DHS questioned HHS authority to make decisions affecting what type of exchange we are building and their right to mandate minimum coverage or maximum rates?
  2. "Insist on rational rule-making for Medicaid."  Here the state has issued correspondance to HHS asking for rational Medicaid rules.
  3. "Take the Feds to court, if necessary, to protect state interests."  While Wisconsin has taken the Feds to court on the individual mandate, Wisconsin should challenge HHS' right to regulate many of the other rules in PPACA including the false choice they give between choosing to implement a PPACA exchange or have one imposed on us.  Wisconsin should be throwing up every roadblock imagineable and force HHS to drag us kicking and screaming into compliance.
  4. "Keep citizens fully informed every step of the way."  This is where DHS has failed Wisconsin the most.  We need to hear the constant clarion call about how Wisconsin's insurance industry stands to be destroyed by PPACA, what that means to each of our pocket books, and how we can fight it.

When it comes right down to it, Dennis Smith has to admit that it's an issue of state's rights.  Prior to his taking the helm at DHS, Dennis smith said:

"Congress and the Administration have enacted a sweeping overhaul of one-sixth of the American economy and in doing so have dramatically expanded the reach and scope of federal power.  This federal expansion is a direct challenge to the traditional authority of the states." 


"Obamacare Strikes at Traditional State Authority.  State officials face a dilemma of epic dimension because they have been forced into fighting for the traditional concept of federalism itself."

Secretary Smith clearly knows the right thing to do!  Wisconsin must fight the implementation of health insurance exchanges tooth and nail!  Heck, he's even outlined what states like Wisconsin must do in order to fight PPACA. 

The question is: can the Dennis Smith that runs DHS can take some advice from the Dennis Smith that wrote for the Heritage Foundation?  Will Secretary Smith stand up for Wisconsin against Obamacare by refusing to implement health care exchanges in Wisconsin? 

Secretary Smith we implore you to advise Governor Walker that the right thing to do is to:

  1. Halt development of Wisconsin's health insurance exchange,
  2. Return any monies we've spent from our $38MM Early Innovator Grant to implement exchanges to HHS,
  3. Sever our Early Innovator Grant agreement with HHS

Secretary Smith, the future of our state and our nation depend on your ability to do the right thing!  You know the right thing to do and are uniquely positioned to make it actually happen.  Help Wisconsin stand up and proudly assert it's rights. 

Don't rely on the false hope that the Feds will do right by Wisconsin.  They won't! Down deep you know they won't! 

It seems that, when it comes to Obamacare, there are two distinct Dennis Smiths.  One advocates standing firmly on principal against implementing PPACA health insurance exchanges.  The other hopes for flexibility from the federal government while actually implementing Wisconsin's health insurance exchange!  Will the real Dennis Smith please stand up? 

Stand up for the consumers in Wisconsin that will be priced out of health care by PPACA!   Stand up against the diminishing quality of care that will necessarily ensue as health care becomes rationed under Obamacare!  If Wisconsin's strong insurance industry has any hope to be preserved, we must all stand courageously against PPACA.  Secretary Smith we look to you to show us how to stand up against PPACA!  You're uniquely positioned to stand up for Wisconsin

Secretary Smith, please, please STAND UP!


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