Committee Unanimously Endorses Expansion to 138 Percent of Poverty Level
Wisconsin lawmakers will decide in the next budget whether Wisconsin will begin in 2014 to take advantage of the option in the Affordable Care Act allowing the state to close the gap in BadgerCare for low-income adults who aren’t caretakers of children. Over the next few days, I’ll examine some of the latest analyses of the costs and benefits of utilizing that opportunity.
A recent item in the growing evidence for using the Medicaid option comes from the conservative state of Idaho, where a study group that reviewed the costs and benefits voted unanimously in favor of expanding access to Medicaid for adults up to 138% of the federal poverty level (FPL). According to an article in the Spokane Spokesman-Review, the 15-person working group created by Republican Governor Butch Otter supported covering the working poor “in order to ‘do something right’ and to save the state hundreds of millions of dollars.”
The working group’s unanimous recommendation came after the panel reviewed a new report from the Milliman consulting group, which found that taking advantage of the Medicaid option will save the state money in both the short and long term. The study – which is one of several in Idaho to reach similar conclusions – analyzed the costs and benefits over the period January 2014 through June 2024 of two options: 1) just doing the portion of the expansion for lower-income adults, which is mandatory in Idaho (because of that state’s low income limit now), and 2) also implementing the optional expansion for adults to 138% of the poverty level. The report concluded that the net fiscal effect of the optional expansion would be a spending reduction of $290 million for the state and local governments over the 10 ½-year period. That savings surpasses by $6.5 million the projected cost ($284 million) of the “mandatory” increase in coverage, which will result primarily from the increased enrollment of already-eligible individuals (because of the individual mandate and the new portals for applying for coverage).
In other words, if Idaho chooses not to take advantage of the Medicaid option, the expected enrollment growth that results from other parts of the Affordable Care Act will cost the state an estimated $284 million over the next 10 ½ years. However, taking advantage of the optional expansion would more than offset the cost – yielding a $6.5 million net savings.
More than four-fifths of the anticipated savings in Idaho is from a sharp reduction in state and local spending for the state’s Catastrophic Health Care program. The funding for that program, which pays the bills for catastrophic care for the indigent, comes from the state general fund and local property taxes.
The math will be different in Wisconsin for a number of reasons. First, the only portion of the expansion that is relevant in Wisconsin is coverage of adults without custodial children (and with incomes less than 138% of FPL). The state currently covers about 21,000 non-custodial adults, and the vast majority are below 138% of FPL. Wisconsin is currently spending over $30 million per year of state funds for the BadgerCare Core Plan coverage of non-custodial adults, and the federal government would pick up most of the cost of that coverage if Wisconsin uses the Medicaid option.
In a couple of upcoming blog posts this week, I’ll take a look at the Urban Institute’s updated state-by-state analysis of the Medicaid option, which estimates the enrollment effects, federal costs, and the state costs and benefits.
Jon Peacock
