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Walker's next big move on Obamacare: Is Medicaid expansion too sweet to pass up?
Peacock: 'Fiscal realities' might prod Walker to expand Medicaid.
Peacock: 'Fiscal realities' might prod Walker to expand Medicaid.

Although Gov. Scott Walker announced last month that Wisconsin won't set up a health insurance exchange as part of the 2010 Patient Protection and Affordable Care Act, a decision with much bigger consequences looms for Wisconsin.

The governor must decide whether he will expand the state's Medicaid programs to serve more people, as called for in the federal law nicknamed Obamacare. Walker has made no bones about his hatred of the law, writing in a Washington Post op-ed that it "will devastate Wisconsin."

But the reality is Wisconsin could save millions of dollars by expanding its Medicaid program, says Jon Peacock, research director with the Wisconsin Council on Children and Families. Obamacare will increase the cost to states, but the law comes with financial aid that more than makes up for it.

"It is a tricky decision for governors, especially when you consider there are going to be increased costs for insuring people. This is a way of offsetting those cost increases," Peacock says. "While some conservative governors may have a knee-jerk reaction against this opportunity, fiscal realities may make them reconsider that."

A study by the Urban Institute estimates that Wisconsin will save $248 million over the next 10 years by expanding Medicaid.

A request for comment from Walker's spokesman went unanswered.

Typical of health insurance regulations, the issue is incredibly complicated, with some uncertainties. Although it's a federal program, each state implements its own Medicaid program. In Wisconsin it's called BadgerCare.

The Supreme Court ruled earlier this year that the federal government cannot force states to expand Medicaid. As an incentive, the feds are offering to pay 100% of the cost of newly eligible enrollees from 2014 through 2016. (For current enrollees, the state now pays 40%, the feds 60%.) After 2016, the federal contribution for the new enrollees gradually drops to 90%.

The federal government wants states to expand coverage for everyone below 138% of the poverty level. Wisconsin already covers many people above that level. 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.

Adults without children are less fortunate. The state has a barebones plan, called BadgerCare Plus Core, for those people up to 200% of the poverty level. However, the state stopped accepting new enrollees in 2009. As a result, there are only about 21,000 Wisconsinites now covered by this plan, and almost 150,000 are on a waiting list.

Expanding Medicaid here would provide poor people without children full Medicaid benefits - which are much better than those in the Core plan, Peacock says.

"You would essentially eliminate the BadgerCare Core plan and replace it with full Medicaid," he says. "The state should then save a fair amount of money."

This could benefit the state in other ways, says Bobby Peterson, executive director of ABC for Health. County governments are required to pay for the mental health services for those who are in chronic need. But if these residents are covered by Medicaid, the feds will pick up the tab, he says.

"Dane County pays a pretty penny for mental health services," Peterson says.

Peacock agrees, adding, "It would help the corrections system immensely because the corrections system becomes the default way of dealing with people with mental health issues."

Spending on health care will go up even if the state doesn't expand Medicaid, Peacock says, because the forthcoming insurance exchange will identify families with children who are eligible for Medicaid under the traditional parameters. The state will have to cover these people even if Walker doesn't expand Medicaid. But in that scenario, the state won't get the extra federal cash.

Or Walker could take the federal cash and at the same time help thousands of uninsured Wisconsinites get health care.

Such a decision, Peacock says, "will save lives by extending health insurance to tens of thousands of Wisconsin residents who can't afford it now."

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