More Spending for Hospitals Would be a Reasonable Response to an Unreasonable Political Choice
The Milwaukee Business Journal reported on Friday that GOP leaders are working on a budget amendment that responds to concerns of Wisconsin hospitals about an anticipated increase in uncompensated care from the Governor’s proposal to remove nearly 90,000 parents from BadgerCare. But rather than alleviate the problem by preserving the current eligibility standards for parents or by making a smaller reduction in eligibility, the new compromise that legislative leaders are working on would help the hospitals without doing anything to protect the parents who would lose eligibility in January 2014.
According to the Business Journal article, Senator Alberta Darling (R-River Hills), who co-chairs the Joint Finance Committee, said the committee’s proposal “will compensate for those who come in (to hospitals) and do not have insurance.”In a press release issued Saturday, the executive director of Citizen Action of Wisconsin, Robert Kraig, had the following to say about this development:
“By conceding that hospitals will be damaged by an increase in uncompensated care, such a deal would be an admission that Walker’s plan will cause tens of thousands [of] people throughout Wisconsin to lose health coverage.… It would be a stunningly callous and immoral act to compensate hospitals for [the] impact of forcing people off health coverage, when it would be easy to prevent this tragic result in the first place by taking the federal health care dollars that are on the table.”
Although I concur with much of that assessment (with the exception of an adjective or two), I think it’s important to add a caveat. If state lawmakers insist upon passing the Governor’s higher priced plan, which covers far fewer people, I hope they do provide funding to hospitals to help pay for the uncompensated care costs for the people now on BadgerCare who end up uninsured. It’s an illogical solution to the challenges facing our health care system, but helping out the hospitals (and capturing federal matching funds in the process) would be better than denying the problem that hospitals will face.
Hospitals have been getting the shaft for the last couple of years because the state hasn’t kept up its end of a plan for improving access to health care for childless adults. Most states have programs to assist hospitals with large amounts of uncompensated care, and Wisconsin also had such a program until 2009. In federal Medicaid jargon, those hospitals are known as “disproportionate share hospitals” and the federal Medicaid dollars to assist them are known as DSH funds. States that help those hospitals finance part of the cost with federal DSH funds – at the usual Medicaid matching rate.
As part of the arrangement for financing the BadgerCare Core plan, which began covering childless adults in Wisconsin in 2009, Wisconsin dropped its program for relieving uncompensated care costs. The state’s waiver for BadgerCare Core needed to be cost neutral from a federal perspective, and that was achieved by essentially shifting the DSH funds into the childless adult coverage. However, when enrollment in that program shot past the amount allowed by the funding cap, the Department of Health Services adopted a moratorium on new enrollment (which peaked at about 65,000 childless adults in January 2010), and the Walker Administration has refused to lift that moratorium – even though enrollment, which is now around 18,000, is far below the intended level. As a result, uncompensated care has been growing, but the former state and federal funds to relieve that burden are going unused.
In short, it totally makes sense to me that Wisconsin should appropriate funds that could match federal DSH funds and assist hospitals with the cost of uncompensated care – if state lawmakers cut in half the current income eligibility caps for BadgerCare and cause many Wisconsinites to be uninsured. I’m reassured to hear Senator Darling say that she understands the uncompensated care problem and wants to address it.
Of course, the proposed solution that is apparently in the works will only add to the price tag of the Governor’s approach – which the Fiscal Bureau already estimated would cost state taxpayers $460 million more from 2014 through fiscal year 2021. Helping out the hospitals and adding to the cost of the Governor’s plan makes sense – but only in a universe where policy choices are being driven by political posturing rather than sound health care policy or sensible fiscal policy.
Jon Peacock
