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Despite the deadline being extended, Wisconsin Gov. Scott Walker announced his decision Friday to implement a federally-facilitated online marketplace for people to purchase health insurance.[/media-credit]

Gov. Scott Walker chose a federally facilitated health care exchange rather than a state-based one Friday morning because he said the state would have little control over their own exchange and that the costs of operating one are unclear.

After months of speculation on what his plans would be, Walker announced in a conference call with reporters that he chose the federally facilitated exchange, an online marketplace where uninsured individuals and small businesses can purchase insurance.

Under President Barack Obama’s health care reform law, the Affordable Care Act, the exchanges will be available across the country by Jan. 1, 2014, and could be set up by the state, the federal government or a partnership of the two. Citing the uncertainty around costs and the lack of control the state would have, Walker chose the federally facilitated exchange.

“On any issue, I, like most governors across the country, Republican and Democratic alike, if given the choice would prefer state-run over anything … just instinctively as a state rights issue,” Walker said. “The problem is these exchanges as defined by the Affordable Care Act really have given a choice of state-run or state in name only.

“In the end, decisions regarding eligibility, minimum standard of coverage and all the important details are ultimately determined by the federal government.”

Walker also said he did not want to put state taxpayers into “long-term spending obligations” that are unclear and not fully funded by the federal government. According to his spokesperson, Cullen Werwie, it would cost the state $45 million to $60 million per year to run a state-based exchange. Werwie added federal funding goes through 2014, at which point, the costs “could fall on state taxpayers.” 

Walker emphasized he did not want to rehash the arguments over the law and that Wisconsin would “comply with the law.” He said he looked forward to partnering with the federal government on the issue.

The governor has said since his campaign he opposes the law, although he set up an office that was supposed to look into how to implement it. Walker disbanded that office in January and returned $37.8 million in federal grant money for implementation.

He said he would wait until the Supreme Court decision to announce his plans, and when they upheld the law on a 5-4 vote, he said he would wait until the elections and see whether Republicans could repeal the law next year. With Obama’s reelection and Democrats controlling the Senate, the law will remain largely unchanged.

Friday was the original deadline for states to make a decision, but Obama announced late Thursday he would back up the deadline one month in response to requests from Republican governors, according to The Associated Press.

In a conference call with reporters, Rep. Jon Richards, D-Milwaukee, one of the most prominent Democrats on the issue, expressed his frustration with Walker’s decision. He said a state-based exchange would have allowed more local input, adding the work that was done under Walker’s predecessor was ignored.

Richards also said if Walker was truly concerned about funding, he would not have turned down the $37.8 million early innovator grant from the federal government.

“Gov. Walker turned back almost $40 million in federal money that we could’ve used to create [the exchange],” Richards said. “Now we’re left with everyone looking at the federal government, hoping they do the right thing but not being able to participate nearly as much as we would have if we had done the exchange here in Wisconsin.”

Richards noted the support from multiple organizations with varying interests around a state-based exchange. This included advocacy groups like ABC For Health and the Wisconsin Council on Children and Families, as well as provider and insurer groups such as the Wisconsin Hospital Association, the Wisconsin Medical Society and the Wisconsin Association of Health Plans.

Republican-leaning business groups like the Wisconsin branch of the National Federation of Independent Business and the Wisconsin Manufacturers and Commerce also supported a state-based exchange.

NFIB released a statement after the decision regretting that a state-based exchange will not take place, but the group said it understands Walker’s concerns – comments that WMC echoed in their statement.

“It is in [the majority of our members’] view that state officials can better develop a system that reflects our needs and priorities, and can do it far more efficiently and effectively than the federal government,” NFIB said. “However, the governor’s analysis, which anticipates unknown massive costs for Wisconsin taxpayers with limited or no control over the system, is a reasonable one that we respect.”

Although Wisconsin’s leading business groups supported a state-based exchange, more conservative groups and legislators did not.

Earlier this week, local tea party groups sent a letter to Walker asking him to turn down the state-based exchange, and the Milwaukee Journal Sentinel reported nine Republican legislators support nullifying the law and arresting federal officials who would implement it. Walker said he did not support those legislators’ views.

Robert Kraig, executive director of Citizen Action of Wisconsin, a group that pushed for a state-based exchange, said in a statement that Walker made the decision in part because of the tea party’s influence.

“It is astounding that Walker is putting the demands of ideological extremists over the interests of health care consumers across Wisconsin who need access to quality affordable health care options,” Kraig said. “The extreme Tea Party response to common sense reform is a real barrier to governing in the public interest.”