Wisconsin Seeks More Medicaid Money to Heal Sick State Budget

Published November 3, 2009

Wisconsin is the latest of 23 states to implement a mechanism to draw down additional federal money to bolster the state’s Medicaid program.

The Wisconsin Hospital Assessment collects revenues from hospitals and pools them, increasing the state’s eligibility for matching federal Medicaid dollars. The additional federal funds are then redistributed to the state’s hospitals as increased payments for care provided to Medicaid patients.

In June Wisconsin Governor Jim Doyle (D) signed into law a 20 percent assessment increase, raising the amount of federal Medicaid funding for the state from $635 million to $796 million, $292 million of which will go to other government spending.

The additional money is also funding a new program for uninsured non-disabled, childless adults in Wisconsin with income up to 200 percent of the federal poverty level.

‘Money Laundering Scam’

“This has very little to do with Medicaid reimbursement,” said Dennis Ellmaurer, principal of Globe National Corporation and Chairman of the Executive Committee in southeastern Wisconsin.

“Gov. Doyle did us a favor when he increased the hospital tax just three months after it was enacted. By including an additional, inflated invoice amount in the 2009-2011 Budget Act, the Governor gave up any pretense that the hospital tax was anything other than a state-run money laundering scam,” he added.

Proponents of the measure argued Wisconsin hospitals had not received an increase in Medicaid reimbursements in more than 10 years and unreimbursed Medicaid payments constitute a “hidden tax” on other patients and their employers, who must make up the shortfall by paying higher health care bills and premiums.

‘Open-Ended Matching’

“The ‘Our Fair Share’ position doesn’t make much sense,” said Justin Higginbottom, state analyst at the Tax Foundation. “Medicaid is an entitlement program, which means that so long as the state meets eligibility criteria, Medicaid federal matching is open-ended. There isn’t one pot of Medicaid funds. If Wisconsin or another state wants to use more federal funds for Medicaid, then the government must tax or borrow to pay for the spending increase.”

As for the “hidden tax” argument, Higginbottom suggested the assessment merely replaces one tax with another.

“It taxes hospitals to pay for increased Medicaid spending and some state non-hospital related expenses,” he said.

‘Disingenuous at Best’

At least two Wisconsin hospital systems raised their rates just five months after the assessment became law.

“During these tough economic times and facing an unprecedented revenue shortage of $6.6 billion dollars, for the state of Wisconsin to increase spending by $3.6 billion dollars, raise taxes by over $2 billion dollars, and charge over $2 billion dollars to the state’s credit card while expanding any program is disingenuous at best,” said Brett Healy, president of The John K. MacIver Institute for Public Policy.

Brien Farley ([email protected]) writes from Genesee, Wisconsin.