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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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As Medicaid Participation Surges Nationally, Wisconsin Experiences Much Slower Growth

11:02 am in Uncategorized by WI Budget Project

National data released last week show that there has been a sharp increase in Medicaid enrollment since last September, and that trend continued in April.  One surprising aspect of the latest HHS data is that the growth in Wisconsin trails that in most other states, even among the states that haven’t expanded Medicaid eligibility.

Nationally, 6 million more people were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) in April, compared to the 3-month period before open enrollment under the Affordable Care Act began last October. That includes growth of 1.1 million additional people in April, as compared to March (in the 48 states that reported data for both months).

The following graph illustrates that the increases have been much higher in the 25 states that have accepted federal funds to expand Medicaid eligibility for adults to 133% of the federal poverty level. The average increase of 10.3% for all 50 states compares with a jump of 15.3% in the expansion states in April (relative to the average enrollment in those states from July through Sept. 2013).

 

In contrast to the other “non-expansion” states, Wisconsin boosted eligibility for childless adults to 100% of the poverty level. Although that partial expansion of eligibility is partially offset by a significantly reduced income cap for parents in BadgerCare, the increase in the number of childless adults enrolled in BadgerCare is already substantially larger than the decline in parent coverage (thanks to much faster than expected growth among childless adults).  That makes it surprising that Wisconsin’s net increase of 1.1% (12,300 people) over the past 7 months was only one-third of the 3.3% average in the other non-expansion states.

I think a careful analysis of the latest Wisconsin data on the DHS website helps explain the smaller increase in Wisconsin. In contrast to the majority of states, where enrollment of kids has increased since September of last year, my analysis of the DHS data reveals that at the end of April there were almost 5,000 fewer children participating in BadgerCare than in September 2013. That’s surprising because the budget bill assumed that the Affordable Care Act would gradually result in an increase of nearly 40,000 already-eligible children being covered in BadgerCare.

Later this month, I’ll take a much closer look at the complicated tends in Wisconsin among already-eligible children and parents.

You can find last week’s report here.

by Jon Peacock

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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Ideology Trumps Math? Medicaid Conundrum for Conservative Wisconsin Legislators

8:31 am in Uncategorized by WI Budget Project

Conservative members of Wisconsin’s Joint Finance Committee (JFC) who support the Governor’s BadgerCare changes are in a tough spot.  On the one hand, they don’t want to add funding to the budget, and would like to free up as much funding as possible for income tax cuts.  On the other hand, they don’t want to take the enhanced Medicaid financing from the Affordable Care Act (even though it would allow the state to do a much better job of closing the large gap in BadgerCare coverage and reduce uncompensated care for hospitals).  A new Legislative Fiscal Bureau (LFB) paper makes it clear that those two objectives are at odds.

The LFB paper (#321) compares three basic alternatives relating to possible changes in BadgerCare:  1) the Governor’s plan, which caps eligibility of parents and childless adults at 100% of the federal poverty level (FPL) , which has the effect of cutting in half the current eligibility limit for parents; 2) covering parents and childless adults to 133% of FPL; and 3) covering childless adults to 133% and retaining current eligibility of parents (up to 200% of FPL).   The second and third options would qualify Wisconsin for the enhanced federal Medicaid financing.

The Fiscal Bureau analysis shows that there are three substantial challenges for the legislators inclined to support the Governor’s proposal:

  • It costs $119 million more in state GPR funds than option #2 (above), even though it would cover 84,700 fewer adults in BadgerCare.   And between now and the end of fiscal year 2020 the Governor’s plan would cost $460 million GPR more.
  • The Governor underfunded his plan, and it requires adding $52 million GPR to the bill; whereas the committee would be able to reduce GPR spending by almost $67 million by approving alternative #2 (or by $23.7 million by approving the third alternative, which retains the current eligibility standard for parents).
  • The budget also underestimated by $23 million GPR the cost of maintaining the current Medicaid programs.  That problems is the same for all of the options, but it adds to the pressure for choosing one of the alternatives that would save money, rather than cost more.

In a mid-January blog post I quoted Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University, who said that most states would eventually take the enhanced federal financing for the following reason:

Usually, in the history of the world, math trumps ideology.

The JFC vote next week on paper #321 may put that proposition to the test.   Read more about the LFB analysis in this WCCF blog post.

Jon Peacock