The ObamaCare Exchanges are Racing Toward a Crisis

Anthem’s reported plan to withdraw from many of the ObamaCare markets where it does business is the clearest sign that the exchanges face a near-term crisis. Yet even before Thursday’s news about the for-profit operator of Blue Cross and Blue Shield plans, there was plenty of reason to expect a white-knuckled, high-stakes showdown over ObamaCare’s future.

The official exchange sign-up data for the 2017 open enrollment period that ended Jan. 31 tell part of the story. The exchange population this year is smaller and tilts older than it did last year, both bad signs for the overall health of the risk pool and 2018 premiums. As the number of people signing up for exchange coverage unexpectedly fell by 463,000, or 4%, from 2016, the number of young adults (18 to 34) shrank by 230,000, while enrollees 55-and-up rose by about 19,000, an IBD analysis finds.

What happens in the ObamaCare-compliant off-exchange market is almost as important as what happens on the exchanges. The Congressional Budget Office says there are about 8 million individuals with unsubsidized off-exchange coverage, and most of those are lumped in the same risk pool as those why buy on the exchange. (Those who have grandfathered policies or buy from carriers that don’t offer exchange policies are in a separate pool.)

Besides pulling the plug on advertising to encourage people to enroll in late January and using his bully pulpit to criticize ObamaCare at every turn, Trump has taken one action that fundamentally undermines the operation of the exchanges. As reported by Reason’s Peter Suderman in February, the IRS acted on Trump’s executive order to ease compliance with ObamaCare regulations by undoing its rule to reject tax forms on which individuals fail to declare whether they had insurance coverage during the prior year.

Now that lax enforcement has been embraced by the Trump administration and publicized by the news media, the big risk for insurers is that ObamaCare will come to resemble the failed markets in states that passed rules requiring insurers to offer the same price to the sick and healthy but didn’t have a mandate to compel people to get coverage. Insurers likely already have felt some impact from lax enforcement of the mandate as customers who signed up for coverage opted not to pay their premiums.

There’s little question that the exchanges were in need of shoring up, regardless of who was elected, but now the situation has become more dire. The Kaiser Family Foundation’s Cynthia Cox noted that there are 200 counties — where Anthem is the only insurer — that could be left without an exchange option if it exits.


Time to REIN in the Bureaucracy

One of the most important priorities of state government is creating an environment that is conducive to job creation. To do this, there are many factors involved: a strong education system, an educated work force, quality infrastructure, and a competitive tax code.

However, another key factor is also creating a regulatory environment that doesn’t stifle business growth and prosperity. Wisconsin’s regulatory environment is heavily impacted by state agencies such as the Department of Natural Resources or the Department of Transportation. These agencies have the ability to create regulations that have the same impact and force as laws passed by the Legislature. However, even though these bureaucratic rules have the force of law, the bureaucrats making these rules were never elected by the public, and elected officials often never voted to approve these rules.

This is why we introduced the REINS – Regulations from the Executive in Need of Scrutiny – Act. This legislation makes several changes to improve the transparency of the administrative rule-making process in Wisconsin.

Rule-making is often a mundane affair. State agencies use rules to add additional clarity to state laws. Pending rules are referred to legislative committees, who can choose whether or not to act on them. Certainty is important to businesses, so some amount of bureaucratic red tape is inevitable.

However, the process for approving an expensive rule is no different than a rule that has little impact on taxpayers.

In 2010, the Department of Natural Resources (DNR) put forward a new rule – new requirements to limit phosphorus in surface waters in Wisconsin – to comply with a federal requirement. While a laudable goal, estimates varied substantially over how much the rule would cost. Worse still, the rule went above and beyond what was required by federal law. Unfortunately, without even a committee vote, the rule was allowed to move forward.

It was only when the DNR began to implement the rule that many local communities started to grasp the size of the problem this new rule had on them. Subsequent legislation required a detailed cost analysis. The result was alarming: The rule would cost $7 billion (including interest) to businesses and local governments (taxpayers).

Thankfully, the Legislature has taken steps in recent years to mitigate the impact of this rule on our economy. Still, more than six years later, we are still trying to undo the worst aspects of this rule. And the uncertainty continues to be a drag on Wisconsin’s economy.

The REINS Act would have prevented problems like this in the following ways:

  • Allow the Legislature to require an independent economic impact analysis.  This would permit an impartial third party to determine the cost of a rule instead of relying on bureaucrats.
  • Require very expensive rules – those that cost more than $10 million over two years – to get approval by the full Legislature before they are enacted.

At the very least, taxpayers have a right to know what these expensive bureaucratic mandates will cost them. The REINS Act improves rule-making transparency and empowers the public to hold legislators accountable.

Rep. Adam Neylon (R-Pewaukee) and Sen. Devin LeMahieu (R-Oostburg) are the lead authors of the REINS Act (Assembly Bill 42, Senate Bill 15).

Governor Makes Veto Threat as Republican Lawmakers Heighten Transportation Fight

Gov. Scott Walker used his Twitter account late Wednesday to threaten his Republican legislative colleagues as they were briefed on his plan for the state’s next transportation budget, vowing to veto a gas tax increase if lawmakers defy Walker’s no-new-tax plan.

Walker’s tweet upended Wednesday night’s budget hearing in which lawmakers, many of them Republicans, squared off with his Department of Transportation Secretary, Dave Ross. In the hearing, lawmakers on the budget-writing Joint Finance Committee roundly battered Walker’s proposed transportation budget for the two-year period starting in July.

The tense exchange deepened fissures among statehouse Republicans on how to square a growing imbalance in Wisconsin’s transportation-funding ledger.

Sen. Luther Olsen, R-Ripon, said the state can’t keep delaying highway projects or borrowing to fund them. Olson said lawmakers “are prepared to bite the bullet and raise some revenue” for transportation, but leadership from the DOT is needed. “We’re going to be spiraling down into a hole where it will cost us so much to get our roads into shape, that we’ll never get it done,” Olsen said.

Rep. Mary Felzkowski, R-Irma, said townships in her rural district are hurting for road and bridge funds.

“If you can find savings, we’re going to be there with you,” the committee’s co-chairman, Rep. John Nygren, told Ross. “But simply reforms are not going to fix the problem.”

Walker’s tweet appears to ratchet up his showdown with some of his GOP legislative colleagues who have remained open to increasing gas taxes or vehicle fees — the two main sources of revenue for the state’s transportation fund. Previously, Walker only said he would veto any increase to gas or other taxes not offset by cuts to other taxes in the budget.

“Let’s be clear. I don’t support spending less on K-12 education than what’s in my budget and I will veto a gas tax increase,” Walker’s tweet read.


Constitutional Convention Proposals Draw Strong Reactions

A Republican lawmaker who wants Wisconsin to join other states in pushing for a constitutional convention acknowledged altering the constitution is “a big deal” as Democrats prodded him for details of his plan.

Sen. Chris Kapenga has proposed a resolution calling for a convention of states to add an amendment to the U.S. Constitution require a balanced federal budget. At a joint Assembly and Senate committee hearing Tuesday, opponents nervous about the dangers of opening up the Constitution for editing warned of a runaway convention while supporters reiterated the importance of sending a message to Congress about addressing national debt that nears $20 trillion.

Wisconsin would be the 30th of 34 states required for a constitutional convention, making it increasingly likely the procedure could be used for the first time since the Constitution was completed.

“Unmistakable warning signs of the consequences of our debt are evident, yet Washington takes no action,” Kapenga said. “We will move one step closer to putting our nation's fiscal house in order.”

Democratic Rep. Chris Taylor said in a statement that amending the Constitution to require a balanced budget might sound harmless but debt can be a necessary tool for the federal government to respond to emergencies, support social security and boost the economy during recessions.

Kapenga said it is unlikely an amendment could pass without bipartisan support because the Constitution requires at least 38 states to ratify an amendment before it can take effect. “There's a lot of misinformation going around,” he said. “We're getting calls from people who are afraid we're going to take away guns.”

A constitutional convention called by 34 states has never been held, but both conservatives and liberals have floated the idea over the years. Article V details two ways to amend the Constitution. Two-thirds, or 34, of the states can require Congress to call a convention of the states or two-thirds vote of the U.S. Senate and House can refer an amendment to the states. Both methods require at least 38 states to ratify an amendment. The GOP controls 33 state legislatures.

President Trump to Order Review of Clean Power Plan

President Trump is set to make a trip to the Environmental Protection Agency Tuesday to sign an executive order that will “initiate a review” of the Obama administration's Clean Power Plan and unravel a handful of other energy orders and memorandums instituted by his predecessor.

The Clean Power Plan caps the amount of greenhouse gases that can be emitted from power plants. The White House argues that the regulation, and others sanctioned by former President Barack Obama, are burdensome to the American economy.

“The president’s been very clear, he’s not going to pursue climate or environmental policies that put the American economy at risk,” said a senior Trump administration official Monday evening.  “[The president] believes that we can serve the twin goals of protecting the environment — providing clean air, clean water, getting EPA back to its core mission, while at the same time… [protecting] energy production in the U.S.,” the official said.

Upon the Clean Power Plan's signing in 2015, President Obama called it “the biggest, most important step we have ever taken to combat climate change,” but the law isn't currently being enforced. In February 2016, the Supreme Court stayed implementation of the law pending judicial review.

Attorneys general from 28 states — led by EPA Administrator Scott Pruitt, then Oklahoma's attorney general — joined together to claim that the plan presents too broad an interpretation of the 1963 Clean Air Act, originally designed to restrain air pollution across the country.

Tuesday's executive order will not address the Paris Agreement, a 2015 United Nations plan to reduce greenhouse gas emissions set to go into effect in 2020, of which the U.S. is a signatory. The official who commented upon the order said the administration's stance on the Paris Agreement is still under discussion.

Wisconsin Voters to Field 65 School District Requests

The push by Wisconsin public schools to ask for more money from local property taxpayers isn’t stopping, with 65 referendums going before voters in the spring election.

About half of the districts will ask voters on April 4 to sign off on new debt while the other half want permission to exceed revenue caps, which prevent districts from spending more than they get from property taxes and state aid. Because enrollment numbers factor into state aid calculations, school districts with declining numbers of students tend to hold referendums to exceed revenue limits. Those asking to borrow are more often located in growing areas and want the money to build more space.

“In 2016 and early 2017, we will have had $2 billion or more of debt questions, which is an incredible spike,” said Todd Berry, president of the Wisconsin Taxpayers Alliance. He attributes it to voters’ increased appetite for referendums and the fact that many districts are retiring debt they used in the late 1990s on buildings now overdue for updates.

The biggest ask next month will come from the school district of Verona, a Madison suburb. The district wants to borrow $162.5 million to fund projects including a new swimming pool, more athletic fields and a new high school. The population in Verona has been booming thanks to Epic Systems, the ever-growing health care software company that employs close to 10,000 people.

Burlington, a city west of Racine, wants to borrow $94.4 million to build a new middle school and a performing arts center and expand the high school’s athletic facilities.

Unlike debt referendums, revenue limit referendums come with a property tax increase unless the school is eliminating spending elsewhere.

West Allis Superintendent Marty Lexmond said his district hopes that by raising the revenue cap it can avoid eliminating music lessons, downsizing its athletic program and increasing class sizes, among other changes. The district has spent down its reserve and is projected to lose 200 students next year. It estimates an extra $12.5 million in funding over the next five years will increase residents’ annual property taxes by $58 for every $100,000.

Green Bay Area Public School District will hold its first revenue limit referendum to deal with a projected $18 million funding deficit that could cost the district 150 jobs, spokeswoman Lori Blakely said. But Blakely notes it would not raise residents’ property taxes because it coincides with decreased debt payments.

“We’re in kind of new territory,” Blakely said. She said she’s not sure what to expect from voters but hopes they’ll recognize a need.

Green Bay will also ask voters to sign off on new debt of $68.5 million to rebuild an elementary school the district has outgrown and fund upgrades including more secure entrances.


AP Sources: US to Approve Keystone XL Pipeline

The Trump administration will approve the Keystone XL pipeline on Friday, senior U.S. officials said, ending years of delay for a project that has served as a flashpoint in the national debate about climate change.

The State Department will recommend that the pipeline is in U.S. interests, clearing the way for the White House to grant a presidential permit to TransCanada to build the $8 billion pipeline, two officials said. It’s a sharp reversal from the Obama administration, which rejected the pipeline after deeming it contrary to national interests.

The officials, who weren’t authorized to speak publicly on the matter and demanded anonymity, said the State Department’s recommendation and the White House’s final approval would occur Friday.

The White House declined to comment, other than to say it would offer an update Friday. State Department spokesman Mark Toner wouldn’t reveal the decision, but said the agency had re-examined Keystone thoroughly after ruling against the proposed project barely two years ago.

“We’re looking at new factors,” Toner said. “I don’t want to speak to those until we’ve reached a decision or conclusion.”

The 1,700-mile pipeline, as envisioned, would carry oil from tar sands in Alberta, Canada, to refineries along the Texas Gulf Coast, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma. The pipeline would move roughly 800,000 barrels of oil per day, more than one-fifth of the oil Canada exports to the U.S.

Oil industry advocates say the pipeline will improve U.S. energy security and create jobs, although how many is widely disputed. Calgary-based TransCanada has promised as many as 13,000 construction jobs — 6,500 a year over two years — but the State Department previously estimated a far smaller number. The pipeline’s opponents contend the jobs will be minimal and short-lived, and say the pipeline won’t help the U.S. with energy needs because the oil is destined for export.

President Donald Trump has championed the pipeline and backed the idea that it will prove a job creator. In one of his first acts as president, he invited the pipeline company TransCanada to resubmit the application to build and operate the pipeline. And he had given officials until next Monday to complete a review of the project.

A Trump presidential directive also required new or expanded pipelines to be built with American steel “to the maximum extent possible.” However, TransCanada has said Keystone won’t be built with U.S. steel. The company has already acquired the steel, much of it from Canada and Mexico, and the White House has acknowledged it would be difficult to impose conditions on a pipeline that is already under construction.

Portions of Keystone have already been built. Completing it requires a permit involving the State Department because it crosses the U.S.-Canada border.


GOP Lawmakers Propose Raising Retirement Age, Altering Pensions for New Public Employees

Two Republican lawmakers are proposing to raise the retirement age from 55 to 60 for most new public workers and change the way pension payments are calculated to ensure the future solvency of the state’s pension system.

The coming bill, authored by Sen. Duey Stroebel, R-Saukville, and Assembly Speaker Pro Tem Tyler August, R-Lake Geneva, is a revision of proposals Stroebel championed last legislative session that never got a hearing. The bills would have made similar changes to the state pension system for existing state employees, reducing their monthly pension payouts.

“A pension system is only as stable as a government’s ability to fund it,” said a memo written by Stroebel and August seeking co-sponsorship, adding that the bill would protect the Wisconsin Retirement System’s solvency and taxpayers by changing benefits for new hires to “bend the cost curve down” on a pension system that is generally considered one of the best in the country.

Currently, WRS uses a complex formula that includes years of service and the average of the highest three years of earnings to determine payouts.

Under the bill, payments would be determined by averaging workers’ top five years of pay instead of the top three. Stroebel has said the result of averaging the top five years of income will be more representative of workers’ salaries. Also under the bill, the minimum age at which a new worker could retire would be 60 instead of 55. Public safety workers could retire at 52 instead of 50.  Government pension contributions would be $59 million lower if the measures were in place today, according to the co-sponsorship memo released this week.

Public employees can retire at age 65 and get full pension benefits, but they may opt to retire earlier and get reduced payments. The system covers 605,049 active employees, retirees and former employees with deferred benefits and paid out $4.9 billion in 2016, according to the state Department of Employee Trust Funds, which oversees WRS.

As of Dec. 31, 2015, the $92 billion system was 99.97 percent funded and its unfunded liability was $24.1 million, according to the department.

Lawmakers Target Welfare Fraud in Wisconsin

In 2012, Brown County sheriff’s investigators spent thousands and used 30 officers to crack a welfare-fraud case that officials say saved taxpayers $1.3 million. For their efforts, which sent three people to prison, the county received $0 in reimbursement.

State lawmakers from the Green Bay area are introducing a bill they hope will change that. Rep. Andre Jacque, R-De Pere; and Sen. Robert Cowles are circulating a bill to allow local and tribal governments to keep up to 20 percent of the money they save the federal and state government when they stop fraud. The bill covers the FoodShare, Medicaid, and Wisconsin Works programs. They plan to seek co-sponsors for the next two weeks. The bill would also:

» Limit the reissuance of FoodShare cards — a common tactic used by people who commit fraud — to four times,

» Freeze “carryover balances” that have gone unused for six or more months, and

» Wipe out balances on cards that have been unused for a year or more. Authorities have found unused balances in the thousands of dollars, including one of more than $14,000.

Welfare fraud investigations have frustrated Wisconsin’s local police, district attorneys and lawmakers for years. It’s a crime, so it must be investigated and prosecuted. But unlike other types of investigations, the police agency is prohibited by law from seizing proceeds, or otherwise profiting financially, when they take a bite out of crime. Federal law — welfare money originates in Washington — prohibits it.

The Jacque-Cowles bill would direct the state to work with the feds to change that, Jacque said.

That would make a difference in places such as Brown County, where the sheriff’s office spends about $100,000 annually for salaries and benefits for two full-time fraud investigators who together handle about 200 cases per year. About 20 or 25 investigations become criminal cases each year, District Attorney David Lasee said, with dozens of others resulting in charges for ordinance violations. The caseload accounts for less than 20 percent of one prosecutor’s time.


Bill Aims to Change Madison-Centric State Leases

In real estate the mantra is, “location, location, location.”” So it goes for the state’s agency leasing program.

But when it comes to the Department of Administration, the government’s leasing agent, location is most often Madison, Madison, Madison.

A bill authored by state Rep. Joe Sanfelippo, R-West Allis, and Sen. David Craig, R-Town of Vernon, aims to change that singular point of view. The measure would require the DOA to identify the “most appropriate and cost efficient locations to place an agency when securing or renewing a lease.”

Leasing agents would have to consider situating a state agency where it provides the most services, and identify multiple locations – at least two of which are outside Dane County.

“When considering leases to house state agency headquarters, the Department of Administration (DOA) currently restricts eligible property locations to a limited geographical area,” Sanfelippo wrote in a legislative memo. “This practice has created an artificial market for commercial real estate which is inflating the cost of lease rates and resulting in taxpayers paying unnecessarily high prices.”

DOA’s general policy, Sanfelippo said, is that the state agencies have to be located in Dane County, and primarily in the county seat and state capital, Madison. “You see these buildings all right there around the Capitol, for the most part,” the lawmaker said in an interview Tuesday with Wisconsin Watchdog. “These landlords know (about the DOA policy) and they screw us 10 times from Sunday when it comes to these leases.”

DOA spokesman Steve Michels said the agency is happy to look at any proposal that might save money and improve its services. “We are aligned in our shared goal to deliver value to the taxpayers through a more efficient government,” he said.

The argument has long been that Madison is the seat of state government. The infrastructure is there and that’s where state government operations should remain. There is no bigger advocate of that position than the city of Madison, a ready benefactor of state centralization.

Keeping state agencies together in the same city or geographical area makes it much easier for departments to interact with the executive and the Legislature, proponents say. Sanfelippo says those arguments no longer apply, particularly in the Digital Age.

“The vast majority of employees that work in these agencies do not interact on a daily basis with the Legislature, and most of the secretaries don’t. That pretty much goes out the window,” the legislator said. “In 1848, when we became a state, maybe that made sense back then, with communications and transportation primitive at the time. In 2017, you don’t have to be in one place. It doesn’t make sense anymore.”

It’s also not fair to citizens who live hours away from Madison, the bill’s authors assert. Some government services arguably are much better suited for other locations around the state.