MacIver News Service | November 28, 2011
Wisc. Democrats Bemoan Proposed Medicaid Changes While Ignoring Fact the Obama Administration Suggested Even Tougher Cuts
When analyzing Wisconsin’s Medical Assistance programs two things are clear: the number of beneficiaries has skyrocketed since 1998 and Wisconsin currently lacks the revenue to continue to provide the same coverage to the ever-growing population of recipients.
Including BadgerCare, aid to elderly, blind, disabled, and long-term care, in 1998 there were 12 Medical Assistance programs in Wisconsin serving just under 400,000 people. In 2011, there are 24 Medical Assistance programs serving 1,175,927 people, a nearly three fold increase in enrollees, which is at a pace nearly ten times the growth of the state’s population over the same period of time.
“The mission and cost of Medicaid in Wisconsin have expanded dramatically over the years,” states the Department of Health Services website.
As the Legislative Fiscal Bureau recently reported: “MA enrollment has increased significantly in recent years. Part of that increase can be attributed to program changes such as the implementation of BadgerCare Plus in February, 2008, and the statewide expansion of the BadgerCare Plus Core Plan (coverage for nonelderly adults without dependent children) in July, 2009.”
DHS doesn’t hide its data about Medical Assistance Programs. All the enrollment data of every program is posted on its website for the past 13 years and is broken down month by month. However, because the programs’ definitions and requirements are constantly changing, analyzing that data is not an easy task.
BadgerCare today, for example, is not the same program it was twelve years ago. When it was implemented in 1999, it was designed to cover about 40,000 people. In 2008 DHS, capitalizing on the legislative popularity of the BadgerCare program, rolled out BadgerCare Plus, a program that grouped several MA programs under the BadgerCare brand and vastly expanded the eligible population by covering people with incomes higher than the original targeted population. The population in BadgerCare therefore exploded from 99,436 in December of 2007 to 555,479 only two months later. However, total enrollment in all MA programs ‘only’ increased by about 48,000, from 853,254 to 901,969.
The Sprawl of BadgerCare
Some key events in BadgerCare’s history help shed some light on DHS’s confusing datasets.
- BadgerCare was implemented in 1999 with an initial enrollment of 5,156
- Exactly one year later, enrollment was at 66,545
- BadgerCare became BadgerCare Plus in 2008 and was expanded to families with higher levels of income and included new groups
- BadgerCare Plus Core was created in 2009 for childless adults making less than 200 percent of the federal poverty level
- BadgerCare Plus Basic was created in 2010 for people waiting to get on to BadgerCare Plus Core Plan
Right now, enrollment in Wisconsin’s Medical Assistance is almost three times greater than it was in 1998. One in five Wisconsinites is enrolled. Not surprisingly, DHS is facing a half-billion dollar (all funds) budget gap.
The Problem of Funding BadgerCare Basic
In May, a statutorily required audit of the BadgerCare Plus Basic Plan by the nonpartisan Legislative Audit Bureau (LAB) was released.
The co-chairs of the Joint Legislative Audit Committee noted at the time that the purpose of establishing the BadgerCare Plus Basic Plan was to provide temporary, unsubsidized health insurance for childless adults who were on the waiting list for the BadgerCare Plus Core Plan. Under former Democratic Governor Jim Doyle, the state imposed enrollment caps on the Core Plan in October 2009 because of limited funding necessary to meet faster than expected enrollment benchmarks (the program is federally mandated that it be budget neutral).
The LAB identified a number of concerns relating to the sustainability of the BadgerCare Plus Basic Plan. Among them was a deficit of $140,300 as of December 2010 resulting from insufficient monthly premiums paid by enrollees to cover program expenditures. This deficit would have been larger if not for a $1.1 million federal grant appropriated by the State Health Access program. The LAB also noted that 438 high-cost enrollees with diagnoses of cancer and cardiac conditions who were on the Core Plan’s waiting list, and later enrolled in the supposedly self-funded Basic Plan, were able to bypass the wait list and transfer from Basic to Core. This scheme kept the costs associated with the new Basic plan lower; however, it dramatically increased the cost of the Core Plan–a program that requires only a $60 annual enrollment fee.
Additionally, the Department of Health Services (DHS) did not begin verifying the eligibility of Basic plan enrollees each month until December 2010. However, some eligibility criteria, including Wisconsin residency, had still not been verified at the time of the audit’s release. LAB also found that individuals who were not enrolled in the plan received services, and enrollees received services that are not covered under the program. Altogether, LAB identified 107 inappropriately paid claims for services that totaled $14,600. DHS also identified several enrollees as potentially ineligible for the program because of their income levels and access to private insurance.
The dramatic increase in the BadgerCare program has proven to be unsustainable. What started out as a program to help 40,000 poor children, pregnant women and parents whose incomes were no more than twice the poverty level has ballooned into a massive entitlement program. BadgerCare’s various plans now cover all Wisconsin children who don’t have access to employer-sponsored insurance where the employer pays 80% or more of the premium; pregnant women who earn up to 300% of FPL and childless adults and parents who earn up to 200% of FPL. As of October 2011, the various BadgerCare programs provided health care coverage to more than 779,000 enrollees.
Closing the Budget Gap
Wisconsin’s DHS not only needs to close a projected biennial budget gap of $219 million in GPR, it also has to satisfy the requirements of the federal government, which provides some funding to the programs DHS administers. The feds have paved the way for states to indiscriminately kick a great many enrollees who make more than 133 percent of FPL off of their MA programs.
Hoping to avoid cutting tens of thousands of people off the programs, DHS is proposing, through a waiver request pending at the federal Department of Health and Human Services, transferring 215,000 people with incomes above 100% FPL into more cost efficient plans that bring Medicaid benefits in line with those in the private sector. This would mean higher premiums for the enrollees. Right now, a person making $28,000 annually pays $10 a month for BadgerCare. The plan would raise that premium payment to $116 or 5 percent of their income. Opponents of this change have siezed upon the fact that this premium increase will lead some to disenroll from the program.
What has not been widely reported, however, is that this premium amount would still be about half of what employer-provided insurance costs. Sill, the Legislative Fiscal Bureau estimated 65,000 people would leave the state’s MA rolls because of the premium changes, or would no longer qualify because of other proposed administrative changes.
Democrats, who championed the expansion of MA that led to the half-billion dollar deficit, are fighting the plan design alterations, accusing Republicans of turning their backs on struggling Wisconsin families. Many lawmakers have joined liberal organizations who are petitioning DHHS Secretary Kathleen Sebelius, urging her to deny Wisconsin’s waiver request.
None of those lawmakers publicly recognize that Governor Walker and legislative Republicans actually increased the state’s general purpose revenue funding of Medicaid by $1.2 billion in the current state budget. Because of the completion of the so-called Stimulus program, it was the federal government that reduced MA funding to Wisconsin by $1.33 billion.
The Federal MOE Trap
As a condition of receiving an enhanced match rate in Medicaid funding over the past two years, the federal government placed what’s known as a ‘maintenance of effort’ (MOE) requirement on the states, which prohibited them from lowering income eligibility thresholds or making any other changes in the standards and methodologies used to determine eligibility in the program. As of July 1 of this year, those extra federal dollars expired, but the MOE mandate has continued. The Walker Administration is seeking a waiver from the feds’ MOE requirement in order to obtain flexibility to deal with the resulting Medicaid budget crunch.
However, the Obama Administration has laid out a less flexible, and some would argue less benevolent approach.
In a February 2001 letter from DHHS Secretary Kathleen Sebelius, the Obama Administration has suggested the option of swiftly disenrolling approximately 53,000 non-disabled, non-elderly and non-pregnant adults on Medicaid with income above 133 percent of FPL. This would save the state over $60 million GPR per year. Rather than just kicking people with incomes above 133 percent of the Federal Poverty Line off of BadgerCare, however, the Walker Administration is seeking federal approval to change its eligibility requirements. If the waiver is granted, only the following would be removed from the MA rolls:
- Those who refuse to pay a 5 percent premium towards the cost of their own care if their incomes are 150 percent over the federal poverty level
- Those who have access to affordable employer-sponsored coverage
- Would-be enrollees who fail to prove they are residents of Wisconsin
Another fact often missing in this debate: the enrollment cap on the Core Plan (imposed by a Democratic governor) resulted in a larger decrease in enrollment than the proposed changes the Walker Administration is seeking. And those cuts were indiscriminate.
The Core Plan’s enrollment cap made no distinction as to whether other coverage was available to an individual nor did it give would-be enrollees a choice to pay a fair share for the cost of coverage. While Wisconsin’s proposed changes would take these factors into consideration, the Obama Administration’s proposed solution similarly makes no distinction.
The budget cutting solution the feds suggested earlier this year was a one-sized fits all mandate that would not take into consideration many potential medicaid recipients’ individual situations. The Wisconsin Department of Health Services is seeking flexibility from the federal government to reduce overall previously-budgeted medicaid spending in a way that will do the least harm to those most in need.
Only if the federal government fails to grant Wisconsin’s requested waiver, would Wisconsin be forced to indiscriminately trim their Medicaid rolls.