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Despite Calling Medicaid Expansion Funds Unreliable, Wisconsin Lawmakers Rely on Other ObamaCare Funds

6:26 am in Uncategorized by WI Budget Project

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. Read the rest of this entry →

Wisconsin Taxpayers Would Save Even More than Expected by Expanding Medicaid

12:01 pm in Uncategorized by WI Budget Project

Piggy bank with stethoscope

Expanding medicare would benefit Wisconsin taxpayers even more than expected.

Expanding BadgerCare coverage to all adults below 138% of the federal poverty level (FPL) would save significantly more money for Wisconsin taxpayers than previously estimated. According to a memo prepared last week by the Legislative Fiscal Bureau (LFB), expanding BadgerCare but would save state taxpayers an estimated $206 million during the 2013-15 biennium, compared to current law, but would cover 87,000 more adults than the state now expects to insure via BadgerCare at the end of the current fiscal year. That savings is $87 million more than the LFB calculated when the budget bill was being debated.

To put this news a little differently, by rejecting federal funding that would finance the full cost of providing BadgerCare to all newly eligible adults up to 138% of FPL, state lawmakers cost Wisconsin taxpayers $206 million in the current biennium and far more than that in the next biennial budget. One of the things making this news particularly significant is that the Department of Health Services estimated in late June that the state is facing a $93 million GPR deficit in the Medicaid budget. Expanding BadgerCare to more adults (including many of the 63,000 people who lost coverage in April) could potentially eliminate the need for significant Medicaid cuts, if state policymakers moved quickly.

The LFB paper, which was prepared for Senator Shilling, indicates that if lawmakers decide next spring to cover parents and childless adults up to 138% of the poverty level, effective in January 2016, state taxpayers would save between $261 million and $315 million over the last 18 months of the 2015-17 biennium.

Based on the LFB numbers and my own calculations, it appears that covering 87,000 more adults in BadgerCare could have saved state taxpayers a total of between $545 and $618 million over the period from April 2014 through June 2017.  Although it’s now too late to achieve all of the potential savings, state lawmakers can still take advantage of the Affordable Care Act to reduce costs very substantially in the next biennium.

In addition to the costs savings, there are many other compelling reasons to expand BadgerCare (see WCCF’s “Top Ten” list),  rather than expecting adults who are slightly above the poverty level to purchase more expensive private coverage through the new  insurance Marketplace.  Another recent news item reinforced those reasons – when we learned last month that only 19,000 of the 63,000 people who lost eligibility for BadgerCare have gotten insurance through the Marketplace. (Read more here.)

In November, people in many parts of Wisconsin will be able to vote on an advisory referendum regarding whether the state should accept the federal funding that would ensure that far more Wisconsinites have insurance, while also saving state taxpayers upwards of $261 million in the next biennium, and balancing the Medicaid budget. Let’s hope there is a robust debate on that issue, and let’s demand that policymakers who oppose taking the federal funds offer alternative plans for getting the state’s Medicaid budget back into balance.

From www.wisconsinbudgetproject.org.

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Breaking with Tradition in Wisconsin: BadgerCare

12:17 pm in Uncategorized by WI Budget Project

Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.

BADGERCARE

In the last four years, state lawmakers have made substantial changes to the BadgerCare program, which provides health care coverage to low-income individuals and families. The most dramatic change, which took effect in April 2014, was to cut the income eligibility limit for adults in half, to the federal poverty level (FPL), or $19,790 for a single parent with two children.

The cut in eligibility yields savings that offset part of the cost of extending coverage to at least 100,000 childless adults below the poverty level, many of whom had been on a BadgerCare waiting list. But the cut – which knocked more than 60,000 parents off BadgerCare – could have been avoided if the state had accepted federal funding that would finance the cost of covering newly eligible adults with incomes up to 138% of the federal poverty level ($27,130 for a family of three).

A decline in the number of parents enrolled in BadgerCare and Transitional Medical Assistance (TMA) began earlier, after the 2011-13 budget bill granted the Department of Health Services (DHS) sweeping authority to make cost-cutting changes, even if those changes conflict with state law or administrative rules. In July 2012, DHS used that power to make a number of changes affecting adults, including raising BadgerCare premiums and expanding them to more parents. Although most adults above 100% of FPL lost their BadgerCare eligibility in April 2014, Transitional Medicaid serves a dwindling number (14,753 in June 2014) of parents above that income level.

Despite the sharp drop in enrollment of parents in BadgerCare, the net result of the state policy changes and indirect effects of the federal Affordable Care Act (ACA) has been an increase in total BadgerCare enrollment. And because about a third of the parents who lost BadgerCare coverage were able to purchase subsidized insurance plans through the health insurance Marketplace, there should be a decrease in the number of uninsured Wisconsinites. Nevertheless, the decision to reject the federal funding and only partially expand childless adult coverage has many drawbacks, including:

Accepting the full federal funding and covering adults up to 138% FPL would yield BadgerCare coverage for about 85,000 more adults than the Governor’s plan, yet was projected to save state taxpayers $119 million during the current biennial budget period.

Since Marketplace coverage is significantly more expensive for low-income adults than BadgerCare, the restrictions on eligibility will be a financial hardship for thousands of families, and many of the affected adults are likely to go uninsured; and

Because the enrollment of childless adults has exceeded expectations, the state Department of Health Services projects a much larger shortfall in Medicaid funding, and more than $200 million in cuts to state and federal Medicaid spending will be necessary if lawmakers continue to refuse the federal funds for Medicaid expansion.

DHS tried to use the authority it was granted in the 2011-13 budget bill to make changes that it estimated would cause at least 29,000 children to lose their BadgerCare coverage; however, the Obama Administration rejected those changes because they conflict with “maintenance of effort” provisions of the federal health care law that require states to protect coverage of kids until 2019. Nevertheless, the 2013-15 budget bill codified the BadgerCare changes for kids, enabling those measures to go into effect once the maintenance of effort requirements no longer protect children’s coverage.

Although most of the proposals that would directly affect BadgerCare for children have been delayed by federal law, the changes that are affecting parents seem to be indirectly reducing kid’s coverage.   Over the first six months of 2014, the number of children over the poverty level who are enrolled in BadgerCare has dropped by more than 24,000 – a decrease of 13.6%.

On a more positive note, state lawmakers passed a number of worthwhile measures relating to mental health care during the 2013-14 session. For example, the 2013-15 budget bill appropriated $29 million in new state funds for mental health programs and created an Office of Children’s Mental Health to improve the integration of mental health services provided to children and monitor performance.

You can access the rest of the report here.

Should Counties Put a BadgerCare Expansion Question on the Fall Ballot?

12:53 pm in Uncategorized by WI Budget Project

Sample election ballots

Wisconsin residents may get to vote on BadgerCare expansion.

At least 11 Wisconsin counties may add an advisory referendum to the November ballot on the question of whether Wisconsin should expand BadgerCare and take the federal funding that would cover the full cost of newly eligible childless adults. The proposed ballot measure has generated a healthy debate about whether the Medicaid expansion topic is an appropriate matter for an advisory referendum.

There are many strong arguments in favor of taking the federal funding (see WCCF’s “Top Ten” list); however, some people who argue against including the BadgerCare question on the November ballot contend that it’s not a concern of county government. But even if we assume for the moment that an interest in county residents’ access to affordable health care isn’t reason enough for counties to allow voters to weigh in on the issue, counties also have their own reasons to be very interested in whether the state expands BadgerCare and accepts the federal funds:

  • One very important consideration for counties is they bear the financial responsibility (rather than the state) for some community-based Medicaid services. By getting 100% federal funding for coverage of childless adults below 138% of the federal poverty level, counties would enjoy substantial savings for mental health services. They could use those savings either to improve those services or for other local purposes, including property tax relief.
  • Another important consideration for counties is that the state recently projected a $93 million GPR deficit in the Medicaid budget – primarily as a result of the much higher than anticipated BadgerCare enrollment of childless adults with incomes below the federal poverty level. That deficit could be eliminated by expanding BadgerCare eligibility and accepting the full federal funding for coverage of childless adults. If policymakers don’t choose that option, significant budget cuts will be needed, and state aid for counties could be one of the budget items at risk.

The risk of significant cuts to Medicaid or elsewhere is also pertinent with respect to another argument that has been made against the proposed referendum – that there is no chance of convincing the Governor and legislators to reconsider their decision to turn down the federal funding. I think that assumption is mistaken because a number of different factors give new life to the issue – not the least of which is that we are electing new lawmakers this fall, and the candidates will probably have to debate the question of how to close the Medicaid deficit. Putting the Medicaid expansion issue on the ballot in November raises the visibility of that debate during the fall campaigns, and it gives voters who may plan to support GOP candidates for other reasons an opportunity to send those candidates a message that they should rethink their position on BadgerCare.

Some people have argued that advisory referenda are simply a waste of time and money because policymakers won’t pay attention to them. I can relate to that cynicism, but how far do we want to take that line of reasoning? If all lawmakers’ minds are closed on this and other policy issues, should we put an end to public hearings? Should the state save money by taking steps to shut down other forms of public input, such as closing down legislators email accounts?

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Wisconsin and Minnesota Take Different Approaches on Releasing Insurance Rates

12:38 pm in Uncategorized by WI Budget Project

For more, go to www.wisconsinbudgetproject.org.

Piggy bank with stethoscope

A comparison of health insurance regulation in Wisconsin & Minnesota.

On Friday, September 6, Minnesota officials released information regarding the premiums that will be charged for insurance policies offered on that state’s new insurance Marketplace (“MNsure”), which begins offering coverage in January 2014. In comparison to the Wisconsin press release issued a few days earlier by the Office of the Commissioner of Insurance (OCI), the Minnesota material contains far more information. (See the range of MN documents here.)

The release from the MN Dept. of Commerce lays out the lowest premium levels (without federal subsidies) for people of three different ages in the St. Paul/Minneapolis area, for each of the four different tiers of coverage (bronze, silver, gold and platinum plans). It also compares the MNsure rates in the Twin Cities with the premiums in other major metropolitan areas and contends that the average (across all four metal tiers) appears to be lower in Minneapolis/St. Paul than the average in any of the other metro areas where rates have been announced.  (See this graphic with that comparison.)

Milwaukee is not part of that comparison because our state hasn’t released any premium levels.  Instead, the OCI press release contains percentage increases – comparing the average, unsubsidized cost of the new plans in Wisconsin next year with the 2013 cost of inferior individual plans. OCI has said that it will not release specific premium amounts.

According to Channel 27 News in Madison: ”OCI Deputy Secretary Dan Schwartzer told WKOW 27 News on Tuesday that the data used is proprietary and would not be readily understood by the general public.” That story reports that Citizen Action of Wisconsin has filed an open records request to try to obtain the actual rates.

If the MN Commerce Dept. had used the sort of approach employed by OCI, it might have said that the lowest cost plan was increasing by 59%.   Described that way, it sounds alarming. However, the picture is considerably different when you look at the dollar amounts and compare a 2014 premium of $90.59 per month (for a bronze MNsure plan for a 25 year-old in the Twin Cities) to a plan that now costs $57, but doesn’t provide the same access to preventive care and doesn’t cover preexisting conditions.

In light of the very substantial changes in insurance next year because of the Affordable Care Act, it’s nearly impossible to make apples-to-apples comparisons of the cost for the new plans and existing coverage available in the individual market.  But at least for me, comparisons that use actual dollar amounts are more meaningful because we can put those figures into the context of rates we are familiar with in the group market.

Once people can start applying for coverage through the federally facilitated Marketplace in Wisconsin, the premium information will come out.  As those numbers emerge, it will be very interesting to see how premiums compare in Wisconsin (and other states that have been resisting the federal law) with those in Minnesota and the states that have developed their own Marketplaces or that are playing a more active role in reviewing the premiums.

It will also be interesting to see if Wisconsin officials frame the information in negative ways or embrace the notion that robust participation in the new Marketplace would be good for Wisconsinites. It isn’t hard to imagine that some governors and insurance commissioners who have been opposing the law for the last couple of years might continue to be less than enthusiastic about helping it to succeed. However, active or passive resistance to the Marketplace would be very problematic in a state that is relying on that part of the ACA as the way to provide insurance for almost 100,000 adults who are being removed from BadgerCare.

Wisconsin’s Federal Funds Conundrum: Inconsistent Approaches Undermine Arguments about Sustainability

8:00 am in Uncategorized by WI Budget Project

Short-term Federal Dollars Build up the Balance Used for Permanent Tax Cuts 

The underside of the Wisconsin Capitol Dome

More bad budget choices in Wisconsin.

I find it very puzzling how state lawmakers decide if they will accept federal dollars and how they explain their choices.   State budget writers routinely accept many sources of federal funds, such as highway dollars, yet they question the sustainability of other sources – such as the enhanced Medicaid funding that would actually save Wisconsin taxpayers $119 million during the 2013-15 biennium.  At the same time, other much less reliable sources of federal funds are being used to generate lapses to the General Fund, thereby helping increase the size of the permanent tax cuts in the budget bill.

These inconsistencies in how lawmakers decide what to do with federal funding are timely this week because the Joint Finance Committee votes tomorrow on a plan for using lapsed funds (including a couple of federal funding sources), and because of the recent news about the state’s decision not to fully utilize additional federal dollars that could bolster employment services for people with disabilities.

The Center for Investigative Journalism reported last week that the state is forgoing federal funds that would enable it to serve most of the more than 4,000 people with disabilities who are on a long waiting list for employment services.   They pointed out that a Legislative Fiscal Bureau analysis concluded that Wisconsin could get an additional $14.2 million in federal funds over the next two years if it were to come up with a $3.9 million match.  According to Mike Greco, Administrator of the Division of Vocational Rehabilitation (DVR), “If we did receive our full state match we could work with another 3,000 individuals.”

When the issue was debated in the Joint Finance Committee (JFC) in mid-May, the chief argument used against drawing down all of the federal money seemed to be very similar to the primary justification for not taking the enhanced Medicaid funds.   The Center’s article reports that Rep. Dean Knudson (R. Hudson) said the JFC decision was based on “protecting Wisconsin citizens from potential further reductions in federal funding.”

That line of reasoning hasn’t been applied to all sources of federal funds (which comprise 28% of the 2013-15 state budget).  On Thursday the JFC finally has an opportunity to vote on the Walker Administration’s plans for lapsing certain state and federal dollars to the General Fund (a couple of weeks after those lapses occurred).   The lapses include at least two short-term sources of federal funding, the largest of which is an additional transfer of federal performance bonus funds that the state earned for the success of BadgerCare in increasing the number of children participating in Medicaid.  The additional $8.36 million of bonus funding being lapsed brings the total to $47.8 million during the 2011-13 biennium (versus $8.76 million of that federal funding used to help finance Medicaid costs).

Those lapses and others have added to the General Fund balance of more that $600 million that the state estimated it would have at the close of the state fiscal year on June 30, 2013, which helped make it possible to increase the size of the income tax cuts in the recently enacted budget bill.   Keeping in mind that the federal bonus funding ends later this year, the state is essentially using a federal revenue source that it knows will soon end to help pass permanent tax cuts – even as state policy makers argue that we shouldn’t accept federal dollars that might hypothetically be reduced at some future date.

Another example of that is the way the state has been shifting federal TANF block grant funding to the Department of Revenue to free up state General Fund dollars that had been financing the Earned Income Tax Credit.  That maneuver (explained in more detail here) will eliminate all or almost all of the $80 million TANF balance – thereby using a one-time source of federal funding to build up the state General Fund balance and make the income tax cut easier to pass, despite the fact that it creates a gap between ongoing revenue and ongoing expenditures (i.e., a structural deficit).

In comparison to those federal dollars, which conservative state lawmakers are happily using for an ongoing purpose – even though we know those sources of federal funds will soon end, the additional federal funding for employment services look quite secure, and it would have a far more concrete payoff.    As I said at the outset, I find these choices very puzzling.

For more, go to www.wisconsinbudgetproject.org

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