This coming Wednesday, October 1, marks the start of a new federal fiscal year and with it a significant drop in the federal share of funding that helps support Wisconsin’s Medicaid program. The federal medical assistance percentage (FMAP), based on a federal formula that reduces the federal share in states where median income is growing, is slated to decrease from its current level of 59.06% to 58.27% in federal fiscal year (FFY) 2015.

At first glance, this may only seem like a small decrease. However, as the most recent DHS Budget request reported, the new FMAP is actually 0.92% lower than originally budgeted in the Act 20 legislation, and a small decrease in the federal percentage amounts to a very large sum of money. The lower-than-expected FMAP contributes to the current Medicaid shortfall by increasing state costs by $52 million over the last nine months of the current state fiscal year.

The trend continues into the next biennium as well. DHS projects that by July 2015 the childless adult population in BadgerCare will reach 145,000, and on October 1, 2015 the FMAP is projected to decrease further to 58.12% and later to just under 58% for FFY 2017. To replace the lost federal funding due to the decreasing Medicaid FMAP, DHS estimates that the state will need $188.2 million in state funds in the 2015-2017 biennium.

Although the regular FMAP is declining in Wisconsin, in states that expand Medicaid to 138% of the poverty level, federal law locks into place the enhanced federal share of the cost of covering newly eligible adults: 100% of costs until 2017 and 95% in 2017. Given the current budget hole and projected increase in costs for BadgerCare in the next biennium, increasing eligibility for parents and childless up to 138% and accepting the enhanced federal funding would not only extend better access to health care to more Wisconsinites but would serve as a much needed “booster shot” to help improve Wisconsin’s fiscal health.

Sashi Gregory