The number of childless adults participating in BadgerCare jumped to more than 103,000 in May – which puts that figure well above the estimate of 94,600 at the end of the biennium that the Dept. of Health Services (DHS) included in their latest budget projections (April 1, 2014).

Wisconsin began this year to make all childless adults below the poverty level eligible for BadgerCare.  The special session bill enacted early this year, which delayed that expansion of eligibility until April, assumed that the number of childless adults in BadgerCare would be roughly 56,000 at the end of April and would gradually increase over the next 12 months.  The current level of participation among childless adults is welcome news for health care advocates, but the much faster-than-anticipated growth is likely to cause significant fiscal challenges.

Wisconsin could have financed BadgerCare for childless adults by accepting the enhanced federal funding available to states that expand Medicaid to all adults up to 138% of the federal poverty level (FPL).  Instead of doing that and getting full federal funding for childless adults, the legislature approved Governor Walker’s plan to pay much of the cost of covering childless adults up to the poverty level by cutting in half the income eligibility ceiling for parents (from the previous limit of 200% of FPL).

The Legislative Fiscal Bureau calculated last year that covering childless adults and parents to 138% of FPL and taking the enhanced federal funding would have saved state taxpayers $119 million during the current biennium, while insuring 85,000 more adults in BadgerCare.   The new enrollment figures show that the potential savings could be considerably larger because the cost of covering the childless adults is likely to be well above what was assumed in the budget bill and in the special session bill that delayed the BadgerCare changes.

The state’s fiscal challenge in the Medicaid budget could be exacerbated by the fact that fewer parents have lost BadgerCare coverage than previously anticipated.  The net change in coverage of parents is a drop of about 58,000 since the end of the previous fiscal year (June 2013), including about 49,000 since the end of December.  Although that’s a very significant decrease, it appears to be a smaller drop in parent coverage than the budget bill assumed.

On the other hand, the number of children in BadgerCare hasn’t been growing as expected; in fact, it has decreased.  The state budget assumed that implementation of the Affordable Care Act (ACA) would increase children’s enrollment by the end of the biennium by about 36,000 (as nearly 40,000 already-eligible children enrolled, and 3,500 kids over 300% of FPL lost eligibility).  However, instead of increasing, the number of children in BadgerCare has dropped by about 2,200 since December, and by about 5,800 (1.2%) since the start of the current fiscal year.  (Note:  A recent DHS presentation indicated that the number of kids in BadgerCare has held steady.  I believe that’s because their analysis excluded the BadgerCare children who are in “extensions.”)

From a fiscal perspective, the lower-than-expected number of children could help the state offset part of the rising cost of covering childless adults.  However, children cost far less to insure, so I don’t expect the downturn in their enrollment to make a large dent in the increased cost of covering adults.

DHS hasn’t yet posted the more detailed data showing May enrollment numbers by income.  After that is released, I’ll analyze the trends among children above and below the poverty level, to try to get a better understanding of why the anticipated “welcome mat effect” has not caused a net increase in enrollment of children.

The lower-than-anticipated participation of kids in BadgerCare is something we will need to study carefully, as we continue to strive to reduce the number of uninsured Wisconsin children and to reach the Governor’s target of cutting in half the state’s uninsured population.

Jon Peacock