Budget '25: Health Services Analysis

The Wisconsin Department of Health Services’ (DHS) main responsibility is administering the state’s Medicaid program, called BadgerCare. Most of its funding comes from federal aid. DHS gets so much money from the federal government that it has the biggest budget of any state agency in Wisconsin by far. However, if you only look at general purpose revenue (GPR), the money that comes from state income, sales and excise taxes, DHS comes in a distant second to the Department of Public Instruction.

In the current budget, DHS has $33.5 billion all funds, of which $10.8 billion is GPR. Federal aid makes up 51% of all funds, and GPR makes up 32%.

Medicare is for retirees and is run by the federal government. Medicaid is for lower income individuals (including the elderly) and is run by the states. Most states give their Medicaid program a unique name, and in Wisconsin, it’s called BadgerCare. Although Medicaid is run by the states, the federal government provides matching funds to subsidize those programs. That federal aid generally covers between 58% and 61% of BadgerCare’s costs.

There are about 1.4 million Wisconsinites currently enrolled in Wisconsin Medical Assistance programs, including 909,127 in BadgerCare. To qualify, adults must make less than 100% of the federal poverty level (FPL), and the limit for pregnant woman and children is 306% FPL. DHS estimates that the cost-to-continue current eligibility and service levels for Medical Assistance (including BadgerCare) will increase by $381 million next year, and $723 million the year after that.

When Obamacare became law in 2010, it counted on states expanding their Medicaid eligibility to at least 138% FPL for everyone. In exchange, the feds promised to subsidize that expansion by covering 90% of the newly eligible participants’ costs. Wisconsin never accepted the federal government’s deal.

Every budget, Democrats demand that the state take the deal and expand Medicaid. The pressure increased in 2021, when the American Rescue Plan Act (ARPA) offered to temporarily boost the reimbursement rate for all Medicaid members by 5% for the first two years of the expansion. If Wisconsin were to accept the Medicaid expansion deal, it would receive an additional $2.3 billion from the feds over the next two years, reducing the need for GPR support by $1.7 billion.

DHS also administers FoodShare, even though that’s not really “health related.” The program makes up a miniscule portion of its budget compared to Medicaid, but it still gets a lot of attention because it’s a high visibility entitlement program.

As of 2023, there were 930,518 people enrolled in FoodShare. The total program cost was $1.5 billion (including administrative costs), with the average benefit being $1,444 for the year. The federal government funds the benefits, while the state helps pay for its administration. Wisconsin’s cost share was $60 million in 2022 and $76 million in 2023.

Milwaukee County has the highest numbers and rates in BadgerCare and FoodShare. 33% of Milwaukee County Residents are on FoodShare and 28% are on BadgerCare.

Freedom, independence, and self-reliance are core American values. No one can embody those values if they are dependent on the government to provide their basic needs.

The MacIver Institute believes that government assistance (i.e. welfare programs) should be the option of last resort for everyone. People should not be encouraged to participate in welfare programs when they have other options, especially when those other options include productive employment. This policy is best implemented by restricting eligibility and establishing requirements that encourage participants to disenroll as soon as they’re back on their feet.

Almost all Democrats and liberals promote an alternative policy. They want to encourage as many people as possible to participate in welfare programs and provide no incentive to ever disenroll. There is a cynical political strategy behind this position. People who are dependent on the government for their basic needs are more likely to vote for politicians who enable that lifestyle.

One of the main reasons why Republicans have always opposed the full Medicaid expansion deal was that they feared someday the federal government would end the subsidies leaving Wisconsin with the full bill. They’ve repeated pointed to the growing national debt. Also, it’s well established that once entitlements are expanded, it’s practically impossible to ever take them back. These fears are not purely speculative. As Congress works out massive spending cuts to reduce the national debt and deficit, Democrats say Republicans are trying to cut Medicaid by $880 billion.

The Wisconsin Institute for Law and Liberty estimate that the full Medicaid expansion would reduce Wisconsin’s uninsured population by less than 0.1%. If the federal government were to reduce its support of the expansion from 90% to 50%, Wisconsin’s bottom line would increase by $154 million per year.

Both Gov. Evers and the agency want to accept the full Medicaid expansion deal from the federal government. That would increase net federal funding by $2.5 billion and decrease GPR funding by $1.9 billion over the biennium. It would result in an additional 95,800 adults becoming eligible for BadgerCare.

Republicans do not plan to include the expansion in the final budget bill.