A paper released yesterday by the Georgetown University Center for Children and Families highlights the devastating effect that one of the Wisconsin Department of Health Services’ (DHS) possible “unspecified cuts” could have on families. The paper examines the real impact of raising BadgerCare premiums to 3 or 4% of a family’s income. It concludes that the change will not merely generate increased revenues, as DHS implies, but will likely result in roughly 49,000 to 87,000 children and adults in low-income families falling off BadgerCare – depending on the magnitude of the premium increase.

The report notes that those who lose their insurance are more likely to use emergency rooms as a high-cost alternative for their usual source of care, and those who remain on BadgerCare are likely to be families who have greater health needs and higher costs of care, resulting in “adverse selection.” In the 2011-13 budget, to be voted on in Joint Finance this afternoon, the Governor proposes cutting more than $1 billion from Medicaid and BadgerCare Plus, including $466 million at the discretion of DHS (pursuant to the unprecedented law-making authority granted to DHS in the “budget repair bill, “ which is still in legal limbo). DHS hasn’t revealed its plans in any detail, but one idea that has been mentioned many times by Secretary Smith is increasing premiums and other cost-sharing.

Legislative Fiscal Bureau Paper #341 includes an attachment from DHS very briefly describing possible changes to achieve the cost cutting, including, “revise cost sharing requirements to be more comparable with private health insurance coverage while still ensuring affordability by capping copayments, coinsurance, and premiums at five percent of family income.” That document and other DHS statements clearly put in play the types of premium increases the Center for Children and Families (CCF) examines.

Provisions known as maintenance of eligibility (MOE) requirements in the federal health care reform act currently restrict the authority of states to apply premiums to more children and parents; however, the budget repair bill directs the state to apply for a waiver to exempt the state from such restrictions, and Congress is considering relaxing the MOE standards.

The CCF conclusions about the effects of higher premiums are very disturbing. Low income families in Wisconsin cannot afford to pay more for their health insurance, and if required to, they will likely become uninsured and the high cost of care in emergency rooms will be shifted to those Wisconsinites with insurance. Premium increases are not the solution to cutting Medicaid costs.

Sara Eskrich