Wisconsin Gov. Scott Walker’s decision to expand the number of Medicaid recipients while diverting others into subsidized plans obtained through the federal exchange has drawn sharp criticism from his 2014 gubernatorial rival, highlighting different approaches to expanding access to care for the most vulnerable.
Walker issued a statement in May, saying, “Our entitlement reforms make sure Medicaid is a safety net for our state’s neediest citizens and protect Wisconsin’s taxpayers from the uncertainty surrounding the federal government’s implementation of the Affordable Care Act.” He continued “Due to our reforms, 81,731 people living in poverty now have health care through Medicaid, and Wisconsin is the only state to not take the expansion with no health coverage gap.”
In August the Wisconsin Legislative Fiscal Bureau estimated the state may forgo more than $100 million in federal dollars annually by not expanding Medicaid eligibility. In response to the estimate, Democratic gubernatorial challenger Mary Burke released a statement criticizing Walker’s Medicaid move, saying, “Gov. Walker’s fiscally irresponsible approach … has resulted in a state budget picture that is a mess.”
Brett Healy, president of the Wisconsin-based John K. McIver Institute for Public Policy, says the governor’s office is correct in arguing continued long-term federal funding is far from certain. “With the federal government $17 trillion dollars in debt, it is absurd to assume the federal government can continue to pay for 90 percent of the cost to expand this program indefinitely,” he said.
Unique Medicaid Expansion
Under the Affordable Care Act (ACA), the federal government promises to reimburse most of the costs for newly eligible enrollees in states that expand Medicaid. The catch: eligibility must be expanded to 138 percent of the federal poverty level (FPL), or about $16,105 per individual and $32,913 for a family of four. Any less than the 138 percent of FPL and a state’s old matching rate is all the feds will pay, about 59 percent in Wisconsin.
Prior to the ACA, Wisconsin had expanded its Medicaid eligibility well beyond the levels advocated by the new health care law, with many residents earning up to 200 percent FPL eligible for coverage for BadgerCare, as Medicaid is called in Wisconsin. However, enrollment was capped because of budget constraints when state funds ran low—making many of those who were eligible for BadgerCare unable to enroll.
In response to the ACA, Wisconsin uncapped its enrollment and also began covering childless adults earning up to 100 percent of FPL while dropping from BadgerCare adults who were eligible for subsidies on the health insurance exchange.
As a result, nearly 97,509 individuals living below the poverty level were added to the Medicaid rolls, and an estimated 62,776 were moved onto the exchange.
“The major differences for the people who are eligible for federally subsidized coverage is that they are immediately eligible for premium subsidies and are no longer subject to the waiting lists created by Wisconsin’s BadgerCare Plus enrollment caps,” explained Linda Gorman, a state health policy expert at the Colorado-based Independence Institute.
Access for All Uninsured
Wisconsin’s approach has resulted in a net gain of roughly 35,000 additional Medicaid enrollees who were mostly childless adults.
Healy noted Wisconsin is only state that rejected Medicaid expansion while ensuring all uninsured residents had access to subsidized health coverage. “Gov. Walker must be doing something right if everyone in Wisconsin has access to affordable health care,” he said.
The Wisconsin Legislative Fiscal Bureau argues the state is forgoing millions in federal Medicaid dollars because states that expand Medicaid to 138 percent of the FPL can expect the federal government to pay nearly all the costs in the first three years.
Healy disputes this characterization. “While critics of Gov. Walker’s plan like to assert that taxpayers will save money by expanding a federal program, they conveniently ignore the fact that this plan is a net spending increase of $750 million dollars. Taxpayers are going to pay for this one way or another,” he said.
Devon Herrick, Ph.D. ([email protected]) is a health economist and senior fellow of the National Center for Policy Analysis. He is the author of the report, Medicaid Expansion: Wisconsin Got it Right.