January 9, 2014
by James Wigderson
Special Guest Perspective for the MacIver Institute
The symbol for the New Year is the Roman God Janus who looks both forward to the new year while looking back at the old. He was the god of transition, and we are in a time of great transition.
Looking back on the year that was, it was not supposed to be a big year in state politics. The Republicans in the state legislature did not want to take big steps and offend the very people who would never vote for them in the first place. The prospects of seeing a conservative agenda for the year looked dim.
Nonetheless, the legislature passed a state budget that contained a $650 million income tax cut. The amount, alternatively described by Democrats as too small to help the economy and too big of a cut in state spending, was larger than originally requested by Governor Scott Walker. The larger tax cut was pushed by state Rep. Dale Kooyenga, and was made possible in part by Kooyenga’s work uncovering a $648 million slush fund at the UW System.
While not enough to roll back the Jim Doyle-era $2.2 billion tax increases that are still weighing on the Wisconsin economy, the income tax cut passed last year was a good down payment. Perhaps more important than the tax cut itself, the legislature also began the work of simplifying the state’s tax code by removing some little-used tax credits and reducing the number of brackets from five to four. Walker is considering major changes to the tax code in 2015, and if the legislature agrees we can look at 2013 as the start of the tax reform process.
In addition to the income tax cut, the state legislature also passed $100 million in immediate property tax relief. This was possible due to a state budget surplus, and it follows two straight years of a property tax freeze.
But as important as these changes were, 2013 will probably be best remembered as the year Walker had the foresight not to accept the federal funds to expand Medicaid as part of Obamacare. By rejecting the federal funds now, Walker will stop the state from spending $3.39 billion on the Medicaid expansion, of which the federal government would cover $3.25 billion over the first 7 years. In addition to paying the federal taxes to cover the Medicaid expansions, Wisconsin taxpayers would also be responsible for covering the cost for the difference between the cost of the program and the federal reimbursement to the state.
That’s if the federal government maintains the higher level of reimbursement for the proposed Medicaid expansion. If Wisconsin had accepted the Medicaid expansion, the state could have found itself in worse situation in the future if the federal government failed to keep the promise of a 90% reimbursement rate. The normal rate of Medicaid reimbursement is just under 60%, and even that was in danger of being reduced thanks to a proposal for a “blended rate” by President Barack Obama during the 2012 federal budget negotiations.
As Congressman Paul Ryan said of the expansion of Medicaid eligibility in the states, “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.”
Instead of taking the additional federal money and promises of more money in the future, Walker chose to change the state’s Medicaid program known as BadgerCare to provide health care coverage to 100% of those under the poverty line. By lowering the eligibility line for Medicaid, Walker and the legislature eliminated the waiting lists to get BadgerCare coverage. He also expanded the categories of those eligible for coverage so everyone below the poverty line is covered.
For those above the poverty line but still among the uninsured, they could get health care coverage through the Obamacare exchanges. Depending on their income levels they could be eligible for federal subsidies for their health care premiums.
Between the 100% coverage below the poverty line and the availability of coverage through the federal health care exchange, every Wisconsinite will now have access to health insurance without putting Wisconsin at future financial risk for higher Medicaid costs.
This has not been easy. Walker faced some opposition from within his own party to the rejection of Medicaid expansion. Nobody could have anticipated the federal government health care exchange website melting down which forced the legislature to delay the full implementation of Walker’s health care plan to April 1st.
But years from now, when other states are struggling to control state spending on health care because they agreed to the federal expansion of Medicaid eligibility, Wisconsinites will be able to point to the health care reforms under Governor Scott Walker in 2013 as the reason our state will be better off. When we look back, Walker’s health care reforms will be the story of 2013, just as Act 10 was the story of 2011.