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Wednesday, April 23, 2014 |  Madison, WI: 41.0° F  Light Rain
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Gov. Scott Walker rejects billions of federal dollars to expand Wisconsin's Medicaid program

Walker: 'I think the moral claim here is we want people to succeed.'
Credit:Joe Tarr
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A day after President Obama pitched an ambitious liberal agenda for the United States, Gov. Scott Walker pushed back. Walker announced Wednesday that he will not expand Wisconsin's Medicaid program, as prescribed in the Patient Protection and Affordable Care Act (a.k.a. Obamacare), and would instead shrink the program.

In a PowerPoint presentation called "From Dependence to Independence - Entitlement Reform in Wisconsin" to the Wisconsin Manufacturers & Commerce meeting at Monona Terrace, Walker struck a defiant tone as he blamed many of the country's problems on a dependency on government.

Walker told the crowd Medicaid "should not be a permanent way of life. And our goal in government should not be how many more people can we get on these programs. Our goal should be the opposite, how many people can we get off of them because we've empowered them to control their own lives, control their own destiny and move themselves and their families forward."

Walker was one of the last governors to announce whether he would expand Medicaid as part of Obamacare. In the past week, citizen groups and health care advocates had ramped up pressure on him to expand the program. But Walker instead became the 13th Republican governor to turn down the offer; eight other Republican governors have decided to expand coverage.

Obamacare calls for states to expand coverage of Medicaid up to 138% of the poverty level. As an incentive, it offered to pay 100% of the cost for newly eligible enrollees for the first three years and 90% after that. (The federal government now pays 60% of current Medicaid enrollees, while the state pays 40%.)

Expanding the program would bring in an estimated $4.4 billion in federal subsidies over the next six years and give roughly 175,000 uninsured people health care.

Walker argued that it is the wrong approach, in part because he doesn't believe the federal subsidy will be maintained. But he also said expansion is immoral.

"From a moral standpoint, are we really doing the people of this state a service if we continue to build a series of programs whose overwhelming purpose is to add more people to that system?" he asked. "I think the moral claim here is we want people to succeed."

He then quoted a line from his inaugural address in 2011: "Moderation and frugality in government lead to freedom and prosperity for all our people."

Wisconsin is unique in that it already offers Medicaid coverage above what other states offer. Under Gov. Tommy Thompson in the 1990s, as part of welfare reform, the state decided to help low-wage earners get health care though its Medicaid program, known as BadgerCare. (Each state runs its own program, and they often have different names, but BadgerCare and Medicaid are more or less synonymous.)

Parents and children at 200% of the poverty level can enroll in BadgerCare programs. Children up to 300% of the poverty level can get subsidized coverage, provided their parents pay some of the premium. And Wisconsin offered a barebones plan, called BadgerCare Plus Core, to childless adults up to 200% of the poverty level.

But in October 2009, Wisconsin placed a cap on the program, closing it to new childless adults who wanted to enroll in BadgerCare, as the state struggled with a spiraling deficit.

Walker proposes lifting the current cap on Medicaid enrollment for poor adults, but only up to the poverty level, allowing some new people into the BadgerCare system. (Children and the disabled who now qualify for coverage will continue to receive coverage.)

However, adults who are still poor -- but slightly above the poverty level -- will be dropped from BadgerCare and have to buy it in the federal exchange. Under the currentfederal poverty level, asingle person who makes $11,490 a year is considered poor; a family of four that makes 23,550 a year is poor. Adults above the level will have to buy insurance in the federal-run insurance exchange when it becomes operational later this year. (Walker decided last year that Wisconsin wouldn't create its own exchange.)

Federal subsidies or tax credits -- on a sliding scale -- will be available to people up to 400% of the poverty level through the exchanges.

Walker argues this system will reduce the number of uninsured people in Wisconsin by 224,580 (there are currently about 477,000 uninsured in the state now). Expanding Medicaid, Walker says, would have reduced the number of uninsured by 252,000 -- about 28,000 more than Walker's plan, but at a much greater expense of tax dollars, the governor argues.

Walker's plan has its own price tag. Lifting the Medicaid cap (for childless adults below the poverty level) will bring 82,000 more people into BadgerCare, state Health and Human Services Secretary Dennis Smith said in a conference call after the governor's speech. The state will have to pay 40% of their subsidy, Smith said. Smith said the governor plans on adding $650 million for Medicaid in the 2013-2015 budget, which Walker is scheduled to announce next week.

Said Smith: "The governor believes in funding the Medicaid program."

Meanwhile, about 87,000 adults who are currently enrolled in BadgerCare but make between 100% and 200% of the poverty level will have to go to the insurance exchange, Smith said. Walker said that people close to the poverty level will be able to buy insurance for as little as $19 a month.

But Jon Peacock, research director with the Wisconsin Council on Children & Families, said that many of those plans will have very high deductibles and copays that will make it difficult for poor people to afford.

"Congress didn't intend for the exchanges to be servicing families just above the poverty level," Peacock said. "Even with the subsidies, the exchanges aren't affordable for many low-income families. And not all families will be eligible for the exchanges."

For instance, if people can get insurance through their employers -- even if they can't afford it -- they won't be eligible for the exchange.

When reporters asked Smith whether those just over the poverty level would be able to afford insurance on the exchange, he said, "That's the assumption that the administration in Washington is making.... That's an argument we'd welcome. We're happy to engage in that debate."

Bobby Peterson, executive director of ABC for Health, said it looks like Walker is making a political calculation to set himself apart from other Republicans who might have hopes of higher office. "He's trying to distinguish himself from the Republican crowd," Peterson said.

Peterson joined numerous health care advocates and Democrats in condemning Walker's proposal.

"We think it's a major step backwards for coverage of low-income working parents in Wisconsin," Peacock said. "Under the leadership of Tommy Thompson, Wisconsin expanded coverage in 1999 to 200% of the poverty level. Now we're going to cut that in half."

Peterson said that although Walker doesn't like government programs, he's sending the uninsured into a federal-run exchange.

"The whole premise of his plan is based on sending people over to a federal-run plan," he said. "It's government-run health care."

People in the Walker administration, Peterson said, seem to think the exchanges will fail. "[They want] to let people crash and burn. That's so cynical," he said. "For the governor of the state, who is responsible for all the people, that's gubernatorial malpractice. He should be sued. It's just terrible.

"The states that have rejected this are some of the reddest states out there," Peterson added. "This reflects the color of Walker."

Throughout his speech, Walker spoke in grand terms about what America means, suggesting he was trying to paint a vision that contrasts to the president's.

"We don't celebrate April 15, we celebrate July 4th," he said in closing. "One represents dependence, the other independence."

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