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Wisconsin, along with a handful of other states, will serve as a national model for implementing the federal health care reform law. The state will receive $37.7 million in federal funding to begin designing the state’s health insurance exchange as required by the law. But it remains unclear how the funding will be used under the administration of Gov. Scott Walker, an avowed opponent of the law.

Earlier this year, the U.S. Department of Health and Human Services announced that Wisconsin, along with Kansas, Maryland, New York, Oklahoma, Oregon and an group of Northeastern states, had been selected as “early innovators,” meaning they would receive a total of $241 million in federal grants to design IT systems for their exchanges. The systems developed will later be used as models by other states, according to the department.

Wisconsin applied to become an “early innovator” under Democratic Gov. Jim Doyle, who was far more sympathetic to the new federal health care law than Walker.

Shortly after taking office, Walker authorized Republican state Attorney General J.B. Van Hollen to join a multi-state lawsuit attempting to overturn it. In late January, after a federal judge sided with the lawsuit, Van Hollen issued a statement that “the federal health care law is dead unless and until it is revived by an appellate court.”

Van Hollen later backed off his declaration, saying he had not advised Walker to halt work on implementing the law.

Walker created an “Office of Free Market Health Care” in a January executive order replacing Doyle’s “Office of Health Care Reform.” The executive order directs the new office “to develop and recommend a plan that encourages competition through the leveraging of a free-market approach.”

The office is also ordered to “explore all opportunities and alternative approaches that would free Wisconsin” from creating a health insurance exchange. Yet it now has federal funding to do just that.

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The office is run by staff from both the state Department of Health Services and the office of the state insurance commissioner, Ted Nickel, a Walker appointee.

Asked how the state would be using the $37.7 million grant and if the intentions differ from those under the Doyle administration, DHS Spokesman Seth Boffeli replied, “The mission of the Office of Free Market Health Care is substantially different from that of the previous administration and, as a result, our efforts to build a statewide health purchasing exchange will also be different.”

The funding, he said, will be used by DHS to upgrade state computer systems and enable them to run the exchange. The systems will also be used to determine whether or not people are eligible for the exchange. “This verification system is the largest, most complex and most expensive component of any state purchasing exchange,” Boffeli added.

The federal health care law intends the exchanges to serve as centralized marketplaces where individuals and small employers can pool their buying power and also receive federal assistance. Plans offered to consumers through the exchanges will have to meet federal standards.

Bobby Peterson, director of Madison’s ABC for Health, a law firm that often represents clients in cases against insurance companies, said of the Walker administration: “To the extent they’re able, they’re going to setup the (Wisconsin) exchange as differently as they can. They’re going to be promoting threadbare policies,” Peterson contends, including health savings accounts (tax shelters for money that can only be spent on health care) and “a la carte” health plans.

Peterson argues that by allowing for such plans, which would allow consumers to pick and choose coverage areas, the exchange would drive up health care costs. He says the burden of paying for uninsured procedures would fall on the health system as it does now when uninsured patients visit emergency rooms.

After Walker established the Office of Free Market Health Care, his spokesman, Cullen Werwie, told NewsBuzz the governor “will continue to advance free market alternatives to the federal health care mandate … The governor continues to oppose the federal health care law and the individual mandate contained within it.”

The “individual mandate” is the law’s requirement that all citizens buy health insurance. Its alleged unconstitutionality is the basis of the multi-state lawsuit, which is expected to eventually be decided by the Supreme Court.

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