In the Wisconsin debate about whether to accept federal funding for expanding BadgerCare, there has been little attention paid to a significant inconsistency used in the arguments made by many opponents of using those funds. They contend that it would be risky to pay for newly-eligible childless adults with the increased federal Medicaid funds set aside by the Affordable Care Act (ACA) for that purpose; however, their alternative plan (which is much more expensive for state taxpayers) relies on another source of ACA funds.

We learned about two weeks ago that expanding BadgerCare to 87,000 additional low-income adults and accepting federal Medicaid funding would have saved state taxpayers $206 million in this biennium, and could yield even larger savings in the next biennium. The Milwaukee Journal Sentinel used that news in a strongly worded editorial criticizing the Governor for “sacrificing good policy on the altar of expedient politics” when his budget bill turned down the increased federal Medicaid funding provided by the Affordable Care Act (ACA).

The editorial captured the most important reasons for accepting the increased federal funding (see also WCCF’s Top Ten List of reasons), and it explains the key flaws in the arguments for turning down the Medicaid funds. However, it didn’t mention the logical inconsistency that I find particularly maddening – when opponents of the expansion argue that states can’t count on the federal government.

GOP governors in many other states have realized that rejecting the increased Medicaid funds would be unwise and inconsistent. For example, last week Pennsylvania became the 27th state to expand Medicaid eligibility for adults and the 8th state with a GOP governor to do so.  In Wisconsin, the inconsistency (some might call it hypocrisy) of rejecting this particular source of funding is made clearer when one remembers that the Governor’s alternative plan relies on the federal Marketplace for insurance.

In lieu of taking federal Medicaid funds that would pay the full cost of childless adults in BadgerCare, the budget bill offsets some of the cost of covering newly-eligible childless adults by cutting in half the eligibility ceiling for parents, with the goal of moving them into subsidized coverage provided through the new insurance Marketplace.  The existence of federal subsidies for private plans provided through the Marketplace is a key part of the Governor’s rationale for capping BadgerCare eligibility for parents and childless adults at 100% of the poverty level – while nonetheless striving to cut in half the number of uninsured state residents.

Those choices make it ironic that supporters of the Governor’s budget would justify their far more expensive BadgerCare plan on the basis that we can’t necessarily count on continuation of the increased federal Medicaid funding, particularly when we consider the following factors:

  1. The risk of the increased Medicaid funding being repealed or reduced is very small, as the Center on Budget and Policies recently demonstrated (and that risk is essentially nil while Obama is in office).
  2. Legislation proposed by House Republicans to repeal the ACA would end the Marketplace subsidies as well as the increased Medicaid funding.
  3. It now appears that the federal subsidies for Marketplace coverage are probably at greater risk than the Medicaid funding because of the pending litigation that challenges the use of subsidies in states like Wisconsin that aren’t operating their own health insurance exchanges. (See this Capital Times article about that litigation.)

The bottom line is that Wisconsin is counting on ACA funding to help adults above the poverty level get access to health insurance.  State lawmakers chose to accomplish that objective with the Marketplace subsidies rather than the increased Medicaid funding.  I think we need to ask those lawmakers what, if anything, they will do to protect the parents formerly covered by BadgerCare, in the event that the ACA is repealed or pending litigation blocks the Marketplace subsidies.

From www.wisconsinbudgetproject.org.

Photo by Sally Longstaff under Creative Commons license