The decision issued yesterday by the DC Circuit Court of Appeals draws attention to a significant drawback of the choice made by Wisconsin lawmakers to cut in half the BadgerCare income eligibility ceiling for parents.  That decision was justified on the basis that low-income parents above the poverty level would be able to purchase subsidized coverage in the new health insurance Marketplace.  However, if the DC Circuit Court’s decision is upheld, or if Congress and the next president repeal the Affordable Care Act (ACA), Marketplace subsidies won’t be available for about 63,000 adults who lost their BadgerCare eligibility in April.

Another justification for the decision in Wisconsin to cut in half the eligibility ceiling for parents was to yield savings that would partially offset the cost of making all childless adults below the poverty level eligible for BadgerCare.  But if the state had agreed to cover all adults to 138% of the poverty level (rather than setting the cap at 100%) and had taken the ACA Medicaid funding for newly eligible adults, the state could have covered about 85,000 more adults in BadgerCare at far less cost to state taxpayers than the Governor’s plan.

The Governor and supporters of his plan to cut BadgerCare eligibility contended that it would be risky for the state to rely on the increased federal Medicaid funding provided by the ACA. They could have addressed that concern in the same way that Arizona and several other Republican-controlled states did – by making the expansion of eligibility contingent upon continuation of the increased federal funds for Medicaid.  I find it ironic that instead of going that route, state lawmakers approved a more expensive plan that was justified on the basis of ACA funding for Marketplace subsidies, and it now appears that those subsidies may be at greater risk than the Medicaid funding.

As I wrote yesterday in a Wisconsin Budget Project Blog post, I don’t expect the DC Court of Appeals decision to be upheld, but the ongoing litigation isn’t the only source of risk for the Marketplace subsidies.  A number of bills and amendments advanced by ACA opponents in Congress would eliminate those subsidies.

When the Governor and state legislators decided to cut in half the BadgerCare income limit for parents, they assumed that the affected low-wage workers would qualify for subsidized Marketplace plans.  With that in mind, I hope the Governor or the Attorney General will file an amicus brief defending the right of Wisconsin citizens to receive Marketplace subsidies.  Alternatively, the Governor and legislators should reverse their decisions to cut BadgerCare eligibility and turn down federal Medicaid funding.

Read more here about other drawbacks of rejecting the Medicaid funding and cutting in half the BadgerCare income limit that had been set at 200% of the poverty level back in 1997, under the leadership of Governor Thompson.

Jon Peacock