The title is not hyperbole - buried in Walker's odious budget bill is the dismantling of the State Life Fund. It's a totally self-financed agency of the State of Wisconsin that sells life insurance - most Wisconsin residents probably aren't even aware it exists.
This certainly isn't the worst thing Walker is attempting, but it's a good indication of just deeply in the pockets of greedy corporations Walker and the GOP are.
The details over the fold ....
In 1911, Wisconsin had a Progressive governor and legislature - they were Republicans, too, but Progressive Republicans. They cared about the problems of all of the residents of Wisconsin, not just a small handful of campaign donors or lobbyists.
Quoting the State Life Fund website:
The Fund was established in 1911 in response to a national scandal over the improper practices of some life insurance companies.
"Improper practices" can be taken to mean that life insurers were happy to collect premiums every week or every month from small policy-holders, but were reluctant to pay claims when the insured died. Not much different from health insurance today.
When I was 12, my parents took out a $5000 whole life policy for me from Prudential. The premium was around $80/yr and payable at least until I reached 65 - 53 years of payments. It accumulated value slowly and paid a tiny dividend each year.
After graduating college and finally getting a full-time job, I decided to cancel the Prudential policy and get a Wisconsin State Life policy when I moved back to WI after 3 years working in IA. This was around 1976, when the old-fashioned era of life insurance was coming to a close.
My parents, like many low income people, had "industrial life insurance" policies. These were policies with low face value - usually term life insurance - where the insurance agent came around to the house once a month or every few months, sat at the kitchen table with a cup of coffee and shot the breeze for a while, and then pocketed the small premium and left.
When the Prudential agent found out I was canceling his company's policy he flew into a rage, screaming about socialism and trying to scare my parents in believing that the state's policy was worthless. The facts were somewhat different.
The State Life policy cost me the same per $1000 of insurance as the Prudential policy - $160/year for $10,000 (the maximum amount) vs. $80 for year for the Prudential policy. Of course the issuing age makes a big difference in premium costs for life insurance - for the Prudential policy, the issuing age was 12; for the state policy, 26.
But the state policy wasn't life paid up at 65 like the Prudential policy. It was 20 payment life, meaning I'd pay the premium for 20 years - to age 46 - instead of 53 years - to age 65. The state policy increased in cash value more quickly too. And to top it all off, by about the 3rd year into the policy, the state policy paid dividends and interest that were more than the premium payments - Wisconsin would actually pay me money to take their life insurance. (The premium and dividend schedules have been re-adjusted since, I believe, so that is no longer true; current policy-holders pay slightly more in premiums than they get back in dividends).
Like my parent's insurance agent, the insurance industry has fought this program in the legislature just about forever. At one point, the legislature managed to increase the maximum policy amount from $5000 to $10,000, but it's been a battle to keep the program alive since.
But, you ask, why should the State of Wisconsin subsidize life insurance for state residents? It probably shouldn't. And it doesn't. The State Life Fund runs a perennial surplus, covering all claims it pays and all administrative costs plus a little more.
From Dave Zweifel's article in the Cap Times:
The fund costs Wisconsin government nothing, but operates off investing the premiums paid by the 30,000-plus state residents who hold policies with face values ranging from a minimum of $1,000 to a maximum of $10,000. The fund, which isn't well-known because it is forbidden from doing any advertising, nevertheless earns dividends that substantially reduce the insureds' premium costs plus build cash values that policyholders can cash in if events in their lives make it prudent to do so.
In 2010, the State Life Fund sold 146 new policies with $69,000 in new premiums. The plan is totally self-supporting and continually runs a surplus. It requires no extra workers in the Office of the Insurance Commissioner. It's a good deal for young families who want to have at least a little life insurance protection. Some cash in their policies and use the cash value to help pay for their children's college. Older folks are known to purchase a policy to cover funeral expenses.
Not only doesn't the fund advertise, it doesn't pay commissions either. And not only can you cash in the policy in an emergency - mine is worth over $12,000 now, and paid off 15 years ago - you can borrow against the cash value and withdraw dividends and interest. I borrowed against the policy and took some dividends in 1987 to help start the business that has been our principle source of income since. I paid back the loan, but my policy value would be even higher if I hadn't withdrawn dividends.
If you're a WI resident, I'd urge you to apply for a policy before the plan disappears. You can get more info here.
Zweifel sums it up pretty well:
But now comes Walker, who received substantial campaign contributions from insurance interests in his race last fall. And because of the acquiescence to his machinations by the Republican majority in the Legislature, the threat to the fund is much more serious. Walker will get his wish unless the proposal is removed from the budget bill before it passes.
Mary Sprague, who has directed the State Life Fund since June 1980, has trouble understanding why the insurance industry is so intent on destroying the plan adopted by the 1911 Legislature, considered the most productive in state history. She comments that most insurance companies won't even sell life insurance with such low face values. Plus, 146 policies sold in one year doesn't appear to be a formidable competitive challenge to the private firms.
But Walker has proved in just a couple of months that he's more than willing to do the bidding of corporate interests over the welfare of working Wisconsinites.