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Who Still Wants to Accept the Obamacare Medicaid Expansion?

Comments | Posted in mi perspectives | By Nick Novak | Posted June 20, 2013 10:59 AM

June 20, 2013

by James Wigderson
Special Guest Perspective for the MacIver Institute

Writing in Isthmus (they can't afford "the"), Erik Gunn has the latest warnings the end is near because of Governor Scott Walker's plan for Medicaid. He reports on a conference call by Robert Kraig, executive director of the extreme leftwing Wisconsin Citizen Action, and Ron Pollack of Families USA, both advocates for universal government coverage. Their message? The sky is about to fall on Wisconsin's poor.

Walker is rejecting a proposed expansion of Medicaid coverage to 133% of the federal poverty line in favor of an expansion of the state's Medicaid programs, BadgerCare, to cover 100% of those below the federal poverty line. The legislature's Joint Committee on Finance (JFC) agreed with Walker on a 12-4 vote to keep his health plan as-is in the state budget, only adding additional funding for hospital compensation for the inadequacies of Obamacare.

Despite the vote, however, liberal special interest groups are hoping that some Republicans in the state senate will join with the Democrats to amend the state budget to accept the proposed increase in federal aid that would come with expanding Medicaid coverage to 133% of the federal poverty line.

The objection to the Walker plan, as Gunn reports, is that it rejects the proposed increase in federal aid that comes with the expansion in Medicaid eligibility. Gunn quotes Kraig, "It's a self-inflicted wound, and it's bad fiscal policy."

This is the theory of free money, as in it's apparently free when it comes from the federal government. But there is no such thing as free federal money, despite what Matthew Lesko promises on late night television. As the MacIver Institute has reported, "The federal expansion of Medicaid would have cost the state an estimated $3.39 billion over the next seven years, but the federal government has promised to contribute about $3.25 billion of that amount." Wisconsin taxpayers get to pay additional state taxes to go with the federal taxes that subsidize the Medicaid expansion.

That's even assuming the promised federal money materializes. We forget that while Wisconsin has balanced its budget under Walker, Congress cannot even agree upon a budget, and President Barack Obama's budgets have been universally rejected in the few moments of bipartisanship in Washington. Sooner or later, the fiscal constraints on the federal budget will force deep cuts in federal spending or higher taxes.

The "normal" share of federal Medicaid spending is a little less than 60%. The federal government is promising 100% reimbursement for those covered under the Medicaid expansion for the first three years, and then 90 percent. Gunn reports that we're not supposed to be worried whether such funding is sustainable.

"Advocates dispute that premise, noting that Medicaid funding is a guaranteed entitlement and that the money to cover the Affordable Care Act has already been appropriated."

That's great to hear. And that whole Sequester thing that's forcing National Guard members to take furloughs?

Except it was just last year that the Obama Administration proposed a change in the reimbursement rates for the "guaranteed entitlement." It was called a "blended rate," which amounted to a cut in the amount given to the states for Medicaid reimbursement for the current program levels.

The Obama Administration was forced to drop the proposal in budget negotiations. But when federal spending for Obamacare hits the Medicaid budget, will they keep their inflated reimbursement policies like they're keeping the promise, "if you like your insurance, you can keep it?"

But Craig's statement about a "guaranteed entitlement" does illustrate the problem with going for the Medicaid expansion to 133% of the federal poverty line. There is no turning back even when the federal government does break its promises. If the political willpower is lacking now, where will legislators find the willpower necessary to cut Medicaid spending when it becomes an even bigger burden on state finances but people are depending on it in the absence of a private insurance market for lower incomes?

It's also interesting how Kraig and Pollack are concerned about the affordability of the subsidized insurance policies in the federal health care exchanges. They claim expanding Medicaid eligibility will cost $6000 per recipient compared to the federal cost of $9000 per recipient of the health care exchange subsidies.

Perhaps they should be addressing their concerns about the exchanges to the Obama Administration. After all, part of the reason why Medicaid is cheaper is because of the lower reimbursement rates for medical providers, which also prevents many medical providers from accepting Medicaid patients. But another reason is the mandated coverage levels that add to the insurance premium costs.

Kraig and Pollack also profess concern that the Walker Administration is gambling that the Obama Administration will continue a waiver for BadgerCare coverage for those who are below poverty but don't have children. That would actually be a concern regardless of the proposed Medicaid expansion. But if Kraig and Pollack are correct that Medicaid is a better deal for state and federal taxpayers than sending people to the federal exchanges, why would the Obama Administration end the waiver?

Surely Kraig and Pollack don't think the Obama Administration would act out of spite or purely political motives, regardless of the cost? If they do, then perhaps they should be having conference calls announcing how they intend to lobby the federal government to do the right thing instead of announcing their hopes the legislature does the wrong thing.

Or perhaps Kraig and Pollack should be having conference calls applauding the legislature's decision to spend $207,000,000 to finally end the Doyle-era wait lists for BadgerCare and provide 100% coverage for those beneath the federal poverty line. Gunn should have asked them what's more compassionate, false promises and no coverage, or the Walker plan of helping those truly in need?

By the way, for those that think the governor might change his mind about taking the proposed increase in federal funds for Medicaid expansion, they're probably riding the high-speed train to federal money fantasy land.