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Obama's Rules
How the president's reelection forced Scott Walker to play ball on health care reform.

Scott Walker

It's taken almost two years, but Gov. Scott Walker has put as much distance between state government and the Affordable Care Act as is legally possible.

This morning, Walker released a letter sent to Kathleen Sebelius, U.S. secretary of health and human services, confirming the state is stopping efforts to design its own health insurance exchange, a marketplace for buying and selling insurance required by the health care reform law. If states don't design their own exchanges, Sebelius' department will step in and do it for them by 2014.

"Operating a state exchange would not provide the flexibility to meet our state's unique needs or to protect our state's taxpayers," Walker says. "No matter which option is chosen, Wisconsin taxpayers will not have meaningful control over the health care policies and services sold to Wisconsin residents. If the state option is chosen, however, Wisconsinites face risk from a federal mandate lacking long-term guaranteed funding."

Walker has had a complicated relationship with the health care law since the 2010 race for governor, when both he and Republican also-ran Mark Neumann pushed for a legal challenge to the ACA. After Walker's election, he authorized Republican Attorney General J.B. Van Hollen to join a multi-state lawsuit seeking to declare the law unconstitutional. Also in January, Walker issued an executive order renaming former Gov. Jim Doyle's Office of Health Care Reform the "Office of Free Market Health Care," a joint effort between the state insurance commissioner and the state Department of Health Services.

Few details trickled out as to what the office was planning. Walker promised "to develop and recommend a plan that encourages competition through the leveraging of a free-market approach." The office even launched a prototype of a website that would administer the state's exchange and gathered input through a survey than ran until late May 2011.

Documents hinted at promoting health savings accounts (tax shelters where consumers deposit income to spend on medical costs) or obtaining waivers from the federal government allowing the state to deviate from the law. But after Obama's reelection last week, a sympathetic Department of Health and Human Services is out of the question, and the conservative legal challenge to health care reform flamed out remarkably in June.

Barring a Romney victory, Walker was out of options, and putting the brakes on the work started by Doyle has never been easy. Walker's Democratic predecessor sought to position Wisconsin not as an objector to reform but as a member of the vanguard, winning a $37 million "Early Innovator Grant" from the federal government. In 2011, Walker's administration claimed it was using the money to prepare the state's IT systems to operate an insurance exchange; since only certain individuals and businesses would be eligible to purchase plans there, a robust system would be needed to check a variety of requirements.

In December 2011, Walker seemed to bet on a favorable outcome before the U.S. Supreme Court by putting the state's efforts to develop an exchange on hold. He subsequently returned the $37 million "Early Innovator" grant to the federal government, and all was quiet.

How far the state got in planning has never been clear. Complaints arose that work groups setup to advise the state drew too heavily from insurance companies, some of which are now criticizing Walker for ceding control to the feds.

The decision could be a victory for groups such as ABC for Health in Madison, a law firm that takes the cases of disgruntled customers seeking to challenge insurance companies. In 2011, its director, Bobby Peterson, warned that the Office of Free Market Health Care would push "threadbare policies ... To the extent they're able, they're going to setup the exchange as differently as they can."

Under a Mitt Romney administration -- even if the Republican had failed to push an Obamacare repeal through Congress -- Walker might have found a willing partner in re-interpreting the ACA. Instead, he's going to have to play by Obama's rules.

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