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Thursday, August 28, 2014 |  Madison, WI: 67.0° F  Partly Cloudy
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The cost of rejecting Medicaid funds for Wisconsin
Studies predict more uninsured residents and a higher price tag for the state
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Kraig: Turning down Medicaid dollars is a "self-inflicted wound and bad fiscal policy." Darling: The Joint Finance plan "returns Medicaid to its original mission: a safety net for the poor."
Kraig: Turning down Medicaid dollars is a "self-inflicted wound and bad fiscal policy." Darling: The Joint Finance plan "returns Medicaid to its original mission: a safety net for the poor."

Last week, the Legislature's Joint Finance Committee voted 12-4 on party lines to reject federal money to expand health insurance for the poor. As a result Wisconsin lawmakers saddled the state with a bigger price tag in return for less health coverage.

That's the assessment of the deal's critics, who include academics and activists, health providers and lawmakers. It's also the conclusion reached in nonpartisan studies examining the impact of decisions by Wisconsin and other states that are turning down the federal Medicaid money.

"It's a self-inflicted wound, and it's bad fiscal policy," says Robert Kraig, executive director of Wisconsin Citizen Action, which has long campaigned for universal health coverage. On a media call last week, Kraig said the measure was certain to add to the number of uninsured Wisconsinites.

The only question is how many. At a minimum, the budget plan (PDF) from the Joint Finance Committee will kick 85,000 people off BadgerCare, Wisconsin's Medicaid-funded health insurance for low-income residents. But the number of uninsured people as a consequence of the deal could rise to as many as 200,000, according to Ron Pollack of Families USA, who joined Kraig on last week's media call. Families USA is a national advocacy group pushing for universal health coverage.

"For somebody who's uninsured, when a health problem occurs " the onset of pain or the onset of illness " they defer care, they don't go to a doctor, they don't get a checkup, they don't try to find out what's wrong that has caused the pain," Pollack said. When they do finally get care, he continued, it's likely to be more expensive and potentially less effective.

Rejecting the tools provided by the federal government to reduce the number of uninsured people "really increases the disparities between the haves and the have-nots in America's health care system," added Pollack. "Unfortunately, some people wind up paying the ultimate price."

Billions lost

In rejecting the federal money, Joint Finance followed through with Gov. Scott Walker's decision in February to forgo some $4 billion in federal funds through 2020 by expanding Medicaid coverage in the state.

The expansion was part of the 2010 Affordable Care Act (ACA) that was upheld last year by the U.S. Supreme Court. Congress, controlled by Democrats at the time, included the Medicaid-expansion portion of the act to ensure broad coverage of the poor while reducing the overall cost of the plan, Pollack said.

The ACA requires everyone to have health insurance and requires employers to provide coverage or pay a penalty. People who aren't eligible for Medicaid and who don't get insurance through their employers will be able to buy health insurance through a new marketplace set up in each state called a health insurance exchange.

The exchange, which could be set up by the state government, the federal government or a partnership between the two, consists of a choice of health plans offered by private insurers. To be part of the plan, an insurer's coverage must meet certain minimum standards set by the feds.

People who cannot afford the full cost of the insurance would be eligible for federal subsidies based on their income.

While shaping the act, Congress debated how to most effectively provide coverage for low-income people above the poverty line -- and therefore not eligible for Medicaid -- but too poor to pay for a policy on the exchange on their own. The nonpartisan Congressional Budget Office told Congress that to simply put that group on the exchange with a federal subsidy would be much more expensive than to extend Medicaid to them, Pollack said.

The cost difference to the federal government is substantial, said Kraig -- up to $9,000 a year per person to buy subsidized coverage through the exchange, compared with $6,000 per person to expand Medicaid.

"That's one of the reasons Congress decided to expand Medicaid," Pollack said. The Affordable Care Act raised Medicaid eligibility to 133% of the federal poverty line. Then, so the states wouldn't get sticker shock, the law guaranteed that the federal government would pay 100% of the cost of the Medicaid expansion until 2017 and that the federal share would never fall below 90%, Pollack said. By comparison, the feds now cover about 60% of Wisconsin's Medicaid costs, with the state kicking in the remaining 40%.

A double whammy

The Supreme Court's ACA ruling helped set the stage for the subsequent state-by-state Medicaid battle. While upholding the law overall, the high court ruled the federal government could not force states to expand Medicaid beyond its current scope.

Last fall Walker said the state would not create a health insurance exchange, leaving the job entirely to the federal government. Subsequently, the governor joined a number of other Republican governors who chose not to take the extra Medicaid money. Instead, he said, the people who would have been eligible for expanded Medicaid will be directed to the health exchange.

That, said Pollack, is a double whammy for those who would have been eligible for expanded Medicaid: somewhat less coverage at higher cost to federal taxpayers.

"Coverage is not as robust under the exchange as under Medicaid," said Pollack. And, he adds, "the federal government is going to be spending considerably more money for their coverage."

The state will as well.

Advocates for the Medicaid expansion don't expect low-income people who would now not qualify for Medicaid to actually use the exchanges, subsidy or not.

"If you earn more than $11,500 per year, you have the choice to buy private health insurance -- at the cost of $2,000 annually," said Rep, Mandy Wright (D-Wausau) in a statement last week after the Joint Finance vote. "Of course no one can afford one-sixth of their income to go to health care."

Predicting that reduced Medicaid coverage would send more nonpaying low-income patients to emergency rooms when they got sick, the Wisconsin Hospital Association (WHA) urged Joint Finance to approve the Medicaid expansion. But the trade group also asked the panel to reinstitute a program, dropped in 2008, that gives hospitals additional funds to cover uncompensated care.

Panel co-chair Alberta Darling (R-River Hills) authored an amendment that added such a subsidy for hospitals, which the WHA says will add up to an additional $75 million over the next two years.

Darling did not respond to an Isthmus request for comment. But in a June 4 joint statement, Darling and Joint Finance co-chair John Nygren (R-Marinette) characterized the Joint Finance plan as one that "returns Medicaid to its original mission: a safety net for the poor."

They, along with Walker, argued that the feds could not be trusted to keep their end of the bargain to subsidize the Medicaid expansion.

"These reforms strengthen Wisconsin's safety net for those in need, while protecting our taxpayers from unnecessary risk and the fiscal uncertainty coming out of Washington, D.C.," Walker said.

Advocates dispute that premise, noting that Medicaid funding is a guaranteed entitlement and that the money to cover the Affordable Care Act has already been appropriated.

Moreover, Kraig and Pollack said, the Joint Finance Medicaid plan is banking on another federal action that is truly uncertain.

The Walker plan, Pollack said, assumes that BadgerCare coverage will continue to be available to people who are below poverty but don't have children. "That's going to require a waiver from the federal government, and that's anything but certain," Pollack said.

If the waiver is not approved, the number of uninsured people in the state could rise from the 85,000 estimated by the Legislative Fiscal Bureau to "probably closer to 200,000 people," Pollack said.

Changing course

So is it a done deal?

The Assembly and Senate are expected to take up the full budget in the next couple of weeks. It remains to be seen whether a handful of Republican state senators who had been opposing Walker on the Medicaid issue will stand firm and try to force a compromise. If they don't, Kraig and Pollack are still hopeful of someday reversing course.

Eight other Republican governors who were also critics of the Affordable Care Act have done just that, and the federal Medicaid expansion program doesn't have a deadline.

"I think Wisconsin is going to take this enhanced Medicaid money," said Kraig. "The question is how many years it's going to take and how many people are going to go uninsured and suffer and even die," until that happens.

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