Wisconsin is seeking to obtain a waiver from the federal government that would provide the state’s insurance companies with immunity against a new health care law that would require them to pay at least 80% of the money collected from premiums on medical care. The law is part of the controversial Affordable Care Act, which, as a whole, has been met with varying degrees of opposition from the nation’s insurance industry and legislators. Governor Scott Walker claims that the waiver is necessary for insurers to remain competitive, and hopes to obtain the exception before the federal requirement is enacted in 2014.
Walker’s efforts have run afoul of consumer advocacy groups who say that a waiver could potential cost consumer millions of dollars in savings. According to the federal law, if insurers cannot meet the 80% requirement, they must return policyholder money in a timely fashion. It is a costly penalty and one that the state’s insurers have been looking to dismiss entirely.
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According to the Wisconsin Insurance Department, six of the 24 insurance companies wiring policies in the state do not meet the requirement set by the federal government. These insurers provide coverage to some 68,000 consumers, who account for 35% of the individual market in the state. If Governor Walker is unable to obtain a waiver, and if these insurers continue to fall below the standard, there could be major financial implications for Wisconsin’s insurance industry.