State forgoes federal funds to go its own way on Medicaid expansion

Wisconsin Gov. Scott Walker proposes to cover the poorest of the poor under Medicaid, the rest on the health insurance exchange.

By — Posted Feb. 22, 2013

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Wisconsin’s Republican governor wants to expand Medicaid to some of the poorest adults in the state while placing others on the state’s health insurance exchange, but he’s not going to get enhanced federal matching dollars to do so.

The Affordable Care Act gives states the option to expand their Medicaid programs to everyone up to 133% of poverty (an effective rate of 138% when certain income is discounted from consideration) starting in 2014. Although some Republican governors — such as Nevada’s Brian Sandoval and Arizona’s Jan Brewer — decided to take up this provision after initial resistance, GOP holdouts remain, including Wisconsin Gov. Scott Walker.

Walker has rejected the idea of fully expanding Medicaid under the ACA. Instead, his upcoming budget proposal outlines a plan for Medicaid to cover nondisabled, nonelderly adults up to 100% of poverty. As part of the proposal, Walker would lift a 2009 enrollment cap on the BadgerCare Plus Core program, which covers childless adults. About 20,000 adults are enrolled in this program, and lifting the cap would open up eligibility for an additional 82,000 adults, said Claire Smith, a spokeswoman for the Wisconsin Dept. of Health Services.

Those adults above 100% of poverty would, under an ACA provision, be eligible to apply for federal subsidies to purchase private coverage on the state’s health insurance exchange. Because Wisconsin’s BadgerCare program covers adults up to 200%, the net impact of Walker’s proposed changes would mean that about 5,000 fewer people would be on Medicaid. However, the number of uninsured adults would decrease by more than 224,500 people, Walker indicated in a statement.

For the changes to take effect, the state Legislature first would have to approve Walker’s budget proposal, Smith said. Wisconsin also would have to submit a state plan amendment to the Centers for Medicare & Medicaid Services to get federal approval for these revisions.

No enhanced funds for Wisconsin

Because Walker has refused to expand Medicaid fully, the state won’t be receiving the enhanced federal Medicaid matching funds authorized by the ACA, said Kenneth Schellhase, MD, MPH, an associate professor at the Medical College of Wisconsin. He’s also the chair of the legislative committee of the Wisconsin Academy of Family Physicians. States that expand Medicaid receive a federal matching rate of 100% to cover the costs of expansion for the first three years, with states eventually taking on up to 10% of the expansion costs thereafter.

Some of Walker’s provisions are encouraging, especially with respect to the BadgerCare Plus Core program, Dr. Schellhase said. “There’s a long waiting list of people waiting to get onto that program. Lifting the cap should open up access to those lower-income childless adults that still meet 100% of poverty, and so those people will get coverage where they wouldn’t have in the state.”

But Walker’s proposal didn’t go as far as it could have to expand coverage, and that’s a lost opportunity from an access perspective, he said. The Wisconsin Academy of Family Physicians “for a very long time has stood for expanding access to health insurance to the maximum extent, because we believe this increases access to care and that everybody should have access to affordable primary and specialty care.”

There’s also an assumption that those above 100% of the poverty level will be able to get subsidized coverage on the exchanges, but the reality is “there’s just a lot of uncertainty of how exchanges will work and how much cost sharing will be for people in those plans,” Dr. Schellhase said.

Just before Walker announced that he plans to reform the Medicaid program, a report from the health consumer advocacy groups Families USA and Citizen Action of Wisconsin projected the potential economic benefits of expanding Medicaid in the state. The full expansion would result in 10,500 new Wisconsin jobs and increase state economic activity by $1.3 billion in 2016, according to the report. At this article’s deadline, Families USA was planning to release similar reports for two other states, Florida and Pennsylvania.

Wisconsin officials have yet to be convinced of the benefits of full expansion. “There are some who think the state should expand Medicaid coverage to as many people as possible and send the bill to the federal government,” wrote Dennis Smith, secretary of the Wisconsin health services department, in an editorial posted on the department’s website. “The flaw in this thinking is the federal government has no money of its own. It gets it from the same people as the state does.”

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