DHS Secretary Indicates There Won’t Be a Minimum Standard for Employer Coverage that Makes Adults Ineligible for BadgerCare
A new 2-page WCCF paper provides a brief status report on the cost-cutting changes that the Department of Health Services (DHS) has been seeking to make to BadgerCare. It includes a table that provides a side-by-side comparison of the anticipated effects of the original and revised DHS proposals, including the number of people expected to lose coverage, the number who would have higher premiums or co-pays, and the estimated fiscal effect.
The brief paper includes lists of the issues that seem to be very near agreement between DHS and federal officials and the issues where the outcome of negotiations is still uncertain. One detail that worries me, and which seems to be coming closer to resolution, is the matter of whether there will be a minimum standard for employer-sponsored insurance (ESI) that makes an adult ineligible for BadgerCare. Based on Secretary Smith’s statements at the last Finance Committee meeting, it appears that the answer is no; regardless of how high the deductibles and co-pays are; an offer of ESI will be considered “affordable” if the premium for the employee will be less than 9.5% of family income.
Although Secretary Smith says that the standards DHS plans to put into place are modeled after the standards in the Affordable Care Act (relating to eligibility for premium subsidies), this is one of the important policy choices where that isn’t the case. Under the ACA, an offer of ESI doesn’t make someone ineligible for subsidized coverage through an exchange if the deductibles and co-pays for that coverage are so high that the “actuarial value” of the coverage is less than 60% of the total cost.
Secretary Smith said at the Finance Committee meeting that the average actuarial value for all ESI in Wisconsin is 76%, which appeared to satisfy federal officials. That may be true, but the average for all employees won’t necessarily be a good guide to the quality of insurance available to lower wage workers. And keep in mind that the average actuarial value of the insurance that employees have is skewed upwards by the fact that people offered better plans are more likely to take the ESI than the employees offered plans with low actuarial value. The state should require an actuarial value of at least 60% of the full cost of that coverage.
If DHS does adopt a policy of denying BadgerCare for people with offers of low-value employer coverage, we will track this issue very closely to document the serious consequences for disadvantaged workers and the significant ways in which the changes fall well short of the minimum coverage required by the ACA.
Jon Peacock
