At long last we can begin to see how the Governor is proposing to close the substantial deficit facing the state, including the changes in the budget for the Department of Health Services (DHS). It will take much more careful study of the various budget documents before the changes come into clearer focus, but here are a few initial observations after having a couple of hours to skim the Dept. of Administration documents.
Among the positive aspects of the DHS budget, the most important thing is that the bill significantly increases state spending for Medicaid – to provide most of the $760 million that DHS said last fall would be needed to maintain the status quo. That figure was based on a number of cost drivers, including health care inflation, a decline in the federal match rate, and caseload growth stemming from last year’s expansion of coverage to childless adults.
That said, the bill also contains a number of cuts that we hope will be reconsidered in light of the fact that they could be avoided by expanding BadgerCare to all low-income adults up to 138% of the poverty level. Expanding BadgerCare and accepting the federal funding, which would finance almost all of the cost of newly eligible and currently eligible childless adults, would save the state upwards of $300 million between January 2016 and June 2017.
BadgerCare coverage of childless adults – One of the areas where the Governor hopes to reduce spending is on BadgerCare coverage of adults who aren’t caretakers of dependent children. The bill directs DHS to seek federal approval to make the following changes for that population:
- Imposing monthly premiums for all childless adults, and additional amounts for “behaviors that increase an individual’s health risk.”
- Limiting eligibility to 4 years.
- Requiring health risk assessments and drug screening.
SeniorCare – This is another area where the bill proposes significant savings by making “reforms.” The specifics of those changes are not spelled out in the DOA summary documents, other than to describe them as “modifications to SeniorCare in order to ensure coherent alignment with Medicare Part D.” The changes are expected to reduce SeniorCare spending (relative to the “cost to continue” level) by $15.6 million of state funds and by about $81 million from federal funds and drug rebates.
Personal Care – The bill would cut $7.5 million from state spending by requiring “an independent assessment for all prescribed fee-for-service personal care to ensure that the right amount of care is being provided at the right time and in the right settings.”
Family Care – The DHS budget seeks to cut state spending for Family Care by $6 million in the second year by making “reforms” that include: requiring all counties to participate in the program by January of 2017, offering benefits through several statewide managed care organizations (MCOs), and providing members with a choice of MCOs.
As noted above, I think there are some positive measures in the DHS budget. Among those is a $4.5 million appropriation of state funds in the second year for a dental services pilot program – to expand access to pediatric and adult emergency dental services. The pilot is proposed for three counties: Brown, Polk and Racine. Another positive measure is about $3.2 million of state funds to expand substance abuse treatment programs by making residential substance abuse treatment a covered service under Medicaid.
A part of the bill that I have mixed feeling about is $15 million per year for hospitals that serve a disproportionate share of the uninsured and under-insured. I think it definitely makes sense to help those hospitals (and draw down a significant amount of federal matching funds), but this isn’t the most cost-effective way to accomplish that. We would help those hospitals even more and save the state well over $300 million by expanding BadgerCare to cover low-income adults up to 138% of the federal poverty level.
We’ll analyze the Medicaid and BadgerCare budget issues more carefully as the budget process continues.
Jon Peacock
