The case for expanding BadgerCare coverage to all adults up to 138% of the federal poverty level (FPL) has been strengthened greatly by four new documents that were issued over the last two weeks. Although these four reports cover a wide variety of topics, and two don’t even mention expanding Medicaid, each of the four sheds new light on how raising BadgerCare eligibility and accepting the enhanced federal funding would help Wisconsin’s health care system and the state budget.
“Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid” – Among the four new documents, this report by the White House Council of Economic Advisors (CEA) is the only one expressly on the topic of expanding Medicaid. Using state-specific data, it makes a very compelling case that the 24 states that have not accepted the federal funding to expand Medicaid should do so in order to improve access to preventive health care services, save lives, create jobs and improve their economy. However, the report isn’t as persuasive with respect to Wisconsin because it relies on a 2013 report by the Urban Institute that didn’t account for the changes in BadgerCare that took effect this year – increasing eligibility for childless adults and cutting the income limit in half for parents. Because the net effect of those changes is that more people will have access to insurance, the CEA report significantly overestimates the magnitude of the benefits of a Medicaid expansion in Wisconsin – though the report’s general arguments are still valid.
“Taking the Next Step: The Role of States in Restraining Health Insurance Cost” – This report by WI Citizen Action uses a thorough regression analysis of the rates for all the Marketplace plans across the country to tease out the effects of various policy choices made by states. Their analysis found that the decision not to expand BadgerCare to 138% of the poverty level has resulted in Wisconsin rates that are about $250 per person per year higher than in states that did expand their Medicaid coverage. That finding can be explained by several factors. First, Medicaid expansions reduce uncompensated care and the resulting cost shift by hospitals to people with private insurance. Second, expanding Medicaid brings down the average cost for people insured in the Marketplace because the adults between 100% and 138% of FPL, who will be covered under Medicaid, are more likely to have been uninsured and to have untreated conditions. In addition, since the individual mandate doesn’t apply to adults below 138% of FPL, without Medicaid expansion the sicker adults in that income group are more likely to purchase insurance, and that puts upward pressure on Marketplace rates.
The DHS quarterly Medicaid report – A report issued on June 27 by the Dept. of Health Services (DHS) regarding the status of the state’s Medicaid budget provides the strongest argument for expanding BadgerCare eligibility. The report says the state is on track to have a $232 million deficit in Medicaid funding by the end of the biennium, including a shortfall of $93 million in state funds – primarily because of the larger-than-anticipated growth in coverage of childless adults. DHS plans to close the gap by making cuts in Medicaid, but hasn’t said how it plans to achieve the cost cutting. The painful cuts that are likely to be necessary could easily be avoided by accepting full federal funding for expanding BadgerCare coverage to 138% of the poverty level.
The June DOR report on May tax collections – The latest monthly report from the Dept. of Revenue indicates that state tax collections over the first 11 months of the 2013-14 fiscal year are 0.4% below the amount collected during the same period of the previous year! If that trend holds true for the entire fiscal year, tax revenue for the first half of the biennium will fall short of the budgeted level by about $200 million (1.4%). A shortfall of that magnitude could put the state budget in the red in the second year of the biennium, even without a Medicaid deficit; but accepting the enhanced federal funding would be a simple way to avoid or reduce a deficit in the General Fund.
Although two of the four reports don’t even mention the Medicaid expansion issue, they all have one thing in common – each of the four significantly strengthens the arguments for expanding BadgerCare and accepting the federal funds.
We have used those reports to update our more comprehensive “top 10” list of the most compelling arguments, which you can find here.
Jon Peacock
