Wisconsin Legislators Hypocritical on Medicaid Expansion

February 10, 2014

by James Wigderson
Special Guest Perspective for the MacIver Institute

Wisconsin residents have another reason to be grateful the state under Governor Scott Walker did not expand Medicaid eligibility to the levels called for under the Affordable Care Act, commonly referred to as Obamacare. As residents of other states are learning the hard way, qualifying for the expanded Medicaid coverage could mean a loss of assets it took a lifetime to accumulate.

It’s a tax payable upon death, and it’s designed to keep down states’ costs. Under federal law, every state in the Medicaid program is required to have a program in place to recover the assets of those who qualified for Medicaid assistance after they die. The program is designed to help compensate states for Medicaid costs for recipients who weren’t necessarily impoverished enough to qualify for benefits.

Ironically, when Wisconsin recently tightened the rules for Medicaid reimbursement, Democrats in the state howled, calling it a “death tax.” In a press release, Democratic State Representative Jon Richards of Milwaukee said, “”The changes could force farmers and seniors all across Wisconsin into having to make terrible choices between their families and their financial security.”

In the same press release, Democratic State Rep Dana Wachs said, “If this is not rolled back, it may become impossible to pass the family farm or small business on to the new generation.”

In their criticisms of the Republicans in the legislature tightening up the rules for the recovery of Medicaid expenses, Democrats never mentioned their desire to expand Medicaid eligibility under Obamacare. That proposed expansion of Medicaid eligibility would have put more family farms and small businesses at risk from the “Medicaid death tax” they supposedly abhor. Worse, Obamacare specifically targets those between 55 and 64 to reimburse Medicaid for health care expenses.

That has not stopped Democrats from criticizing Governor Scott Walker’s decision not to expand Medicaid eligibility under Obamacare. If Walker had agreed to expanding eligibility of Medicaid coverage to 133% of the federal poverty line, more family farms and small businesses would have been placed in peril by the federally required Medicaid reimbursement rules. The terrible choices, as Richards described them, would be harder to escape for thousands of people trapped in a federal entitlement program instead of the private insurance market.

Thanks to a decision by the Supreme Court, states are able to opt out of the Obamacare Medicaid expansion. Walker and Republicans in the legislature chose to eliminate the Jim Doyle-era waiting lists for the state Medicaid program, BadgerCare, and cover 100% of those beneath the federal poverty line.

It also means that those above the federal poverty line could participate in the federal insurance exchange for private health insurance. Unlike in other states, Wisconsin residents above the poverty line wanting to sign up for private insurance are not finding themselves required to sign up for Medicaid.

In those states that did cooperate with the expansion of Medicaid eligibility, some residents aged 55 to 64 are not only surprised to learn that they may be forced into Medicaid but that they may not be able to leave anything for their heirs when they die.

The Seattle Times reported on the case of Sofia Prins and Gary Balhorn who decided to get married rather than end up in Medicaid. Prins owned a home that she did not want to be taken after she died by Medicaid for medical expenses.

The Times explained why the Obamacare Medicaid reimbursement requirements are a problem under an expanded Medicaid eligibility.

“Some 55- to 64-year-olds, who may have taken early retirement or who were laid off during the recession, have found themselves plunged into a low-income bracket. Unlike Medicaid recipients in the past — who were required to reduce their assets to qualify — they’re more likely to have a home or other assets.

“For health coverage through Medicaid, income is now the only financial requirement.”

Washington and Oregon moved to fix the problem, but Wisconsin’s neighbor Minnesota has not. According to Fox News, they collected $25 million in 2004. With the expansion of Medicaid eligibility, more people in Minnesota will find the assets they accumulated in danger of becoming government property after they’re gone, even though if they remained in the private insurance market they would not have to worry. That would be true even if their private insurance policy premium received a 100% federal subsidy.

Wisconsin avoided this trap by deciding against expanding Medicaid and turning more people to the federal health insurance exchange. So instead of criticizing their Republican colleagues for not expanding Medicaid eligibility, the Democrats should be thanking them for not putting more Wisconsin residents at risk from the Obamacare Medicaid death tax.