Obama Administration Approves Wisconsin Medicaid Reforms

Published June 6, 2012

In accordance with standards set by the Patient Protection and Affordable Care (PPACA), the federal government has approved changes to Wisconsin’s state Medicaid program, BadgerCare.

The federal government asked Republican Gov. Scott Walker’s administration to scale back its originally proposed changes due to an anticipated 60,000 participants becoming ineligible. The newly approved changes reduce to 17,000 the number of adults losing taxpayer funded coverage.

Cuts Affect Eligibility, Premiums

Wisconsin’s Department of Health Services (DHS) states the entitlement program, BadgerCare, will experience changes in the following ways.

First, there will be changes in premiums. Those in the state Medicaid program who already pay premiums will mostly likely experience high increases. Additionally, certain members who did not previously pay premiums will now be required to pay. Individuals who neglect to pay their premium will not be eligible for the program for a year’s time.

Second, any adult meeting certain eligibility criteria for the program who is offered employer-sponsored health insurance will be expected to use that coverage instead of the state program.

Finally, some program participants will no longer be eligible for three months of backdated eligibility. Coverage had previously been frequently granted for up to three months of previous medical expenses before a citizen applied for Medicaid.

These changes were made under Wisconsin’s authority to modify state Medicaid plans and are in accordance with what the federal health law would require of states in 2014. Over the years, Wisconsin had already expanded beyond the requirements of PPACA for its Medicaid program.

Cutbacks Designed to Save Funds

According to Stephanie Smiley, communications director at Wisconsin’s DHS, these program changes will affect only “income-eligible non-pregnant, non-disabled adults above 133 percent of the Federal Poverty Level, and are expected to save $28.1 million annually in state funding.”

Sara Eskrich, a health care policy analyst at the Wisconsin Council for Children and Families (WCCF), says her organization has been opposed to the changes from the start.

“BadgerCare has worked well for Wisconsin families and has made Wisconsin a leader in covering children, families, and adults. As a result of its success, we have one of the lowest uninsured rates in the country. While we support some cuts or efficiencies made in Medicaid, we think nearly all of the dramatic cost-cutting changes to BadgerCare are unnecessary.”

Smiley, however, says the state found these changes essential.

“This is not the first time Wisconsin faced the need to find significant savings in the Medicaid program,” she said. “The previous administration had also been directed to cut the Medicaid program as a result of the 2009-2011 budget. The Department was tasked with finding $625 million in savings and had been given broad authority to do so. Rather than denying health coverage to an entire population without regard to their particular circumstances, we have put together reforms that are fair and commonsense.”

Cost-Sharing to Encourage Responsibility

The state expects the changes to cause patients to pay more attention to the costs of care. Smiley maintains the cuts were made in an effort to increase fiscal responsibility among patients for the cost of health care to the taxpayers.

“We all share the goal to ensure that everyone has access to affordable coverage,” said Smiley. “Individuals would only be found ineligible for the program if they already have access to affordable coverage as defined by the federal government or if they choose to not pay a fair share to the cost of their care. We believe as a matter of fairness that families enrolled in Medicaid, who have income comparable to their neighbors, should be expected to contribute a reasonable amount to the cost of their care and receive similar benefits as the typical private plan.”

The largest concern WCCF expresses about the BadgerCare changes is the increase in premiums. WCCF claims the increases will make health care impossible for low-income adults. 

“We are very concerned that the increase in premiums will cause individuals to fall off the BadgerCare program, leaving them uninsured,” said Eskrish. “When you consider the expense of a family of three living on $27,000 per year, an increase in premiums of almost $1,000 per year is a severe hardship and will be an insurmountable barrier to remaining in BadgerCare for many of those families.”

Smiley disagrees, saying the state does not believe the policy changes will cause a significant increase in uninsured.

“We anticipate that approximately 17,000 individuals either already have access to affordable care or they will choose not to pay their premiums,” said Smiley. 

Sign of What’s to Come

Smiley says the majority of those eligible will continue to seek coverage through the state program. Acknowledging disagreements over the reform, she says the state was confident it would receive federal approval, and she believes this will be a learning opportunity for other states trying to balance current eligibility with the new fiscal burden of millions added to Medicaid under PPACA.

“These changes are aligned with policies that will be implemented nationwide as part of the federal health [care] law,” she said. “What happens here in Wisconsin may foreshadow the national experience in 2014.”

The changes to Wisconsin’s Medicaid program are scheduled to take effect this July.