Will Special Interests Convince the Legislature to Overturn Scott Walker’s Obamacare Medicaid Expansion Decision?

May 8, 2013

By James Wigderson
Special Guest Perspective for the MacIver Institute

Under Obamacare, the federal government promises to fully fund an expansion of Medicaid for the first three years, and then 90 percent thereafter. In an interview with the Chicago Tribune, Congressman Paul Ryan, the chairman of the House budget committee, warned governors against relying upon higher levels of federal funding for Medicaid, “The fastest thing that’s going to go when we’re cutting spending in Washington is a 100 or 90 percent match rate for Medicaid. There’s no way. It doesn’t matter if Republicans are running Congress or Democrats are running Congress. There’s no way we’re going to keep those match rates like that.”

Governor Scott Walker instead chose to take state Medicaid spending in a completely different direction. Under Walker’s plan, the state’s Medicaid program eligibility would be dropped to 100 percent of the federal poverty level. Those that would no longer be eligible for the BadgerCare programs would be allowed to purchase insurance through the federally created health care exchange, receiving subsidies depending on the enrollee’s income level. Walker’s plans would eliminate the Doyle-era wait lists for BadgerCare enrollment. The Walker Administration projects an additional 224,000 people will have health care coverage under their plan.

State Senator Alberta Darling has proposed expanding Medicaid coverage temporarily in Wisconsin to cover individuals up to 133% of the federal poverty line for one year. Her excuse for the expansion is the lack of reliability of the federal government. She told the Milwaukee Journal Sentinel, “Look, we’re not going to go back on what the governor proposed – I think he did the right thing. But to look at a transition option if the exchanges do not materialize . . . to me would be an option we should look at.”

Darling is joined by a number of special interest groups, including the Wisconsin Hospital Association (WHA), an endorser of creating a state-run health care exchange, and the Metropolitan Milwaukee Association of Commerce (MMAC), who sent a letter to the legislature also asking for the expansion of Medicaid because of potential delays in the implementation of the federal health care exchanges.

“We believe any transition of Medicaid enrollees into the exchange should only occur after a Wisconsin exchange is demonstrated to be properly functioning and able to serve this low income population.”

It’s a solution in search of a problem. Under Walker’s current proposal, if the federal government does not have the exchange ready for Wisconsin by the deadline, Wisconsin will wait before transitioning to the exchange those above the poverty line enrolled in the BadgerCare programs.

The WHA and the other health care groups that sent the letter to the legislature are also expressing concern that the costs to the individual participating in the exchanges created by the Affordable Care Act may not be so affordable. In their letter to the legislature,

“These out of pocket costs could equate to as much as 20% of total income and could cause this vulnerable group to fall out of coverage and into the ranks of the uninsured.”

That’s not an implementation problem on the state level, that’s a design flaw in the federal program. Those projected costs are the result of the federally mandated coverage provided, and that is not going away after a transition period.

It’s worth noting that while Darling talks about a temporary Medicaid expansion, the letter to the legislature from the WHA and MMAC says no such thing. These groups clearly do not see their recommendation for an expansion of Medicaid beyond the governor’s proposal as temporary. And once Wisconsin commits to the expansion of Medicaid spending beyond the governor’s plan it will be nearly impossible to roll back, even as the federal share of the expansion costs shrink leaving Wisconsin taxpayers picking up the bill.

The proposed increase in Medicaid spending would have long-term risk for the Wisconsin taxpayer and would be counter to the goal of weaning those capable of being self-sufficient from government subsidy. It would place in jeopardy the state’s commitment to fulfill its promises to fully provide health care for those in need. It would place Wisconsin on a path of depending on a surge of federal dollars that will likely prove temporary, leaving Wisconsin with more fiscal obligations than it can handle. That’s not only going back on what the governor proposed, it’s taking us back to the era of Jim Doyle.

A cynic might suggest that groups like WHA, an endorser of President Barack Obama’s Affordable Care Act, are actually trying a “backdoor” implementation of Obamacare in Wisconsin by expressing concerns over the timeliness of the creation of the federal health care exchange. This proposed “compromise” is not about fixing the supposed flaws in Walker’s plan but in fixing the federal plan’s flaws at the state’s inevitable expense.

Rather than send a letter to the legislature about fixing the potential flaws with the exchanges, the special interests would be better off directing their letters to President Obama.