Changes Would Affect Adults over 133% of Poverty Level, but Preserve Children’s Coverage

Letters recently exchanged between the Wisconsin Dept. of Health Services (DHS) and the U.S. Dept. of Health and Human Services (HHS) shed additional light on the status of negotiations over federal waivers and plan amendments the state has proposed, to cut spending for BadgerCare. The letters indicate that federal officials are willing to approve some of the proposed changes, and the state has dropped several others.

Although there still appear to be several significant areas of disagreement, the two sides seem to be close enough together in a few areas that it might be possible for some of the issues to be formally resolved within the next few weeks, while negotiations continue on other issues.  Based on the Feb. 15 HHS letter, the areas where federal approval seems close are the following:

• Applying premiums to adults above 133% of the poverty level, using a graduated scale starting at 3% of income and increasing to 6.3% of income for adults at 200% of the poverty level.
• Making adults ineligible for BadgerCare if they have an offer of employer coverage with premiums of less than 9.5% of household income.
• Dropping people for a year (instead of 6 months) if they fail to pay a monthly premium.
• Accelerating the termination of coverage for BadgerCare participants found to be ineligible.

Although HHS has signaled its willingness to allow the state to toughen the rules on eligibility for adults (over 133% of FPL) who have offers of employer-sponsored coverage, I think there are still several significant policy details that need to be resolved, including these two:

• What is the minimal level of benefits for an employer plan, associated with the new eligibility standard?
• If only one parent can be covered on an employer plan, or if the cost of covering the second parent would push the cost of the plan over 9.5% of family income, are both parents ineligible for BadgerCare?

DHS has agreed to withdraw the following parts of its initial proposals:

• Applying premiums and cost-sharing to children.
• Making children ineligible if the family has access to employer coverage with premiums costing less than 9.5% of family income.
• Ending presumptive eligibility for children.
• Revising the definition of gross household income.

The letters don’t shed much light on a few other DHS proposals, which apparently are still on the table:

• Making young adults ineligible if they could potentially be on a parent’s employer-sponsored plan.
• Requiring documentation of intent to reside in the state.
• Ending Transitional Medicaid.

The letters focus almost exclusively on the proposed changes related to Maintenance of Effort (MOE) waivers, not on the separate proposal for the creation of an alternative benchmark plan that provides a narrower benefit package and higher co-pays.  Secretary Smith said today that the department’s priority is to get the MOE issues resolved and then work on the alternative benchmark plan.

Read more in the article by David Wahlberg in today’s WI State Journal.

Jon Peacock