By Qualifying for Increased Federal Medicaid Fund, Wisconsin Could Avoid Many Budget Cuts 

Two Legislative Fiscal Bureau (LFB) papers released yesterday show that expanding BadgerCare could go a long way to helping avoid or scale back some of the deep cuts in the state budget bill.  One of those memos, which was prepared for Senator Jon Erpenbach, shows that expanding BadgerCare to 138% of the federal poverty level would save $345 million over an 18-month period (from January of 2016 through the end of the biennium) by qualifying Wisconsin for the enhanced federal Medicaid funding that Wisconsinites are helping pay for.

To put that amount in perspective, $345 million would be enough to avoid the cut in aid to school districts; the cuts to SeniorCare, Family Care, and personal care services; plus two-thirds of the proposed $300 million cut to the university system.

The cost-savings have grown substantially since the LFB made comparable calculations two years ago and again last summer.  The primary reason for the much larger figure now is that the number of childless adults below the poverty level who are enrolled in BadgerCare is far higher than anticipated. The LFB now projects that the number of childless adults will reach 152,000 by the end of this fiscal year, which is about 16,000 above the estimate they made in August, and 54,000 above the DHS estimate in 2013.

The new LFB estimate of the savings strikes me as conservative because childless adult enrollment grew by 7,000 in December to more than 148,000.  However, their participation could level off or possibly even decline once a large wave of annual renewals begins this spring.

The other LFB memo issued yesterday estimates the savings that would be achieved from a compromise bill that is now being circulated for cosponsors by Representative Daniel Riemer (D – Milwaukee) and Senator Jon Erpenbach (D – Middleton).  Their proposal would direct DHS to seek a waiver that would technically be a BadgerCare expansion and would qualify Wisconsin for the enhanced federal funding, but the coverage would be provided through private plans purchased on the federal insurance Marketplace.  That approach is very similar to the plan in place in Iowa, which was developed by that state’s Republican Governor, Terry Brandstad.

The proposed compromise could save an estimated $241 million in Wisconsin’s 2015-17 budget, while expanding BadgerCare to an estimated 81,000 adults between 100% and 138% of FPL.  The savings are smaller under this hybrid approach because it is more expensive to subsidize private plans purchased through the Marketplace than traditional BadgerCare coverage.

In light of the deep cuts contained in the Governor’s budget proposal for 2015-17, pressure is mounting to expand BadgerCare and accept the enhanced federal funding that would enable lawmakers to preserve the quality of our education system and avoid other very damaging changes. The new LFB estimates of the potential savings underscore why expanding BadgerCare is a very effective and sensible way to improve the budget bill.

You can read more about the compromise plan in the blog post I wrote yesterday for the Wisconsin Budget Project.

Jon Peacock