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Wisconsin’s request to exempt certain health insurers rejected by the Federal Government

Saturday, February 25th, 2012

Wisconsin’s request that health insurance providers spend 80 cents of every dollar towards medical care premiums has been rejected by the Obama administration. One of the provisions of the financial reforms recommended by Governor Walker administration in Wisconsin requested that the change be phased over the next three years for all health insurance policies issued to families and individuals. The proposal also requested that the providers spend at least 71 percent towards medical claims in the year 2011 and 74 percent in 2012.

The Wisconsin administration’s request was not accepted by the Obama administration because it could imply that a large number of health insurance players may move out of the Wisconsin market which could leave the customers in a lurch. In addition to this reason, the United States Department of Health and Human Services also found out that there was no data provided to substantiate this request. This department has found out that, of the 15 companies in this state, 12 of them are already spending close to 80 percent of the cost towards processing medical claims and providing improved medical care to their customers. Of the pending three companies, two more of them have the plans for leveraging the same in 2012.

There are close to 180,000 individuals and families in the state of Wisconsin are covered by health insurance that is provided health insurers in this state. Many consumer advocates, including Consumers Union, opposed this request by Wisconsin stating that this state currently has one of the most competitive markets for health insurance as compared to other states in the country. One of the law firms with public interest in Madison, ABC for Health, has also contended Wisconsin’s request since it did not have any merit or credibility. This organization said that the rejection of this request by the Obama Government was actually a win for the people of Wisconsin. Bobby Peterson, the ABC for Health’s Director and also a public attorney said that the proposal that was forwarded by the state would have actually offered protection to insurance providers who did not offer many benefits to their policy holders.

Ted Nickel, the insurance commission, in a press release said that the decision by the Federal Government was ‘puzzling’ and that 4 health insurance providers in this state have already pulled out of the market. There was no other comment offered by the Commission of Insurance except for this release.

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