Wisconsin is the only state in the country to use the Affordable Care Act to expand its Medicaid program while turning down the additional federal dollars available through the law to pay for it. Credit: Associated Press

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Wisconsin's decision last week to challenge a fee imposed by the Affordable Care Act set up a comparison not lost on advocates who support the law.

The fee has cost the state about $23 million so far. In contrast, Gov. Scott Walker and the Legislature's opposition to the law is projected to cost $678.6 million in state tax dollars through the 2017 fiscal year.

That's because Wisconsin is the only state in the country to use the Affordable Care Act to expand its Medicaid program while turning down the additional federal dollars available through the law to pay for it.

"While $23 million isn't peanuts, it pales in comparison to the money we are leaving on the table for ideological reasons," said Jon Peacock, research director of the Wisconsin Council on Children and Families.

Wisconsin joined Texas and four other states last week in a lawsuit challenging a fee imposed on for-profit insurance companies that contract with states to manage the care of people covered by Medicaid.

The states must reimburse the companies for the fee. Wisconsin estimated that the fee has cost the state $23 million so far.

"Once again, we are taking action to protect Wisconsin taxpayers from the adverse effects the Obama administration's Affordable Care Act has on our citizens," Walker said in a statement Thursday. "This lawsuit is meant to ensure Wisconsinites are not left paying this unconstitutional and coercive tax, which could result in a loss of millions of dollars to Wisconsin's Medicaid program."

The Legislative Fiscal Bureau estimated in December that Wisconsin is on track to spend $678.6 million more through the fiscal year ending June 30, 2017, than the state would have had Walker accepted the federal money available through the law.

"He's looking for pennies on the floor of his car, when he should be looking at the bags of money in front of him," said Bobby Peterson, executive director of ABC for Health, a public interest law firm.

Under the Affordable Care Act, the federal government initially would pay the full cost of covering poor people previously not eligible for Medicaid through 2016, with the federal government's share gradually dropping to 90% by 2020.

The expansion would have covered adults with incomes below 138% of the poverty threshold — $16,394 for one person this year — and without dependent children.

The Walker administration and Legislature instead opted to partially expand the state's Medicaid program but not accept the additional federal dollars.

The expansion — covering adults without dependent children and incomes below the poverty threshold of $11,880 — provided health insurance for 147,000 people through BadgerCare Plus, the state's largest Medicaid program, as of January.

Adults previously covered by BadgerCare Plus — those with dependent children and incomes above the poverty threshold — now are eligible for federal subsidies to buy health plans on the marketplaces set up through the Affordable Care Act.

Wisconsin has more to gain by accepting the additional federal dollars than any other state because of its partial expansion of the Medicaid program, said Peacock of the Wisconsin Council on Children and Families.

The Walker administration and others have contended that the federal government eventually will reduce the money available to states through the law because of persistent U.S. budget deficits.

The federal government cannot meet its current Medicaid obligations, Laurel Patrick, a spokeswoman for Walker, said in an email. And members of both parties have proposed decreasing federal funding for Medicaid programs.

"We maintain that states should not depend on the use of uncertain federal funds, which is why Governor Walker implemented unique reforms ensuring everyone living in poverty has access to health care through Medicaid while protecting taxpayers from uncertain federal funding," Patrick said.

In Wisconsin, the federal government pays about 58% of the cost of Medicaid programs and the state pays the balance.

The additional federal money available through the Affordable Care Act pays for the cost of covering people previously not eligible for Medicaid.

That is the money that the state has turned down.

As of June 30, the state had passed up an estimated $227.6 million available through the law, according to the Legislative Fiscal Bureau.

More than $200 million will be added to the tab in the current fiscal year.

"He's just completely tone deaf on this issue, and he's not running for higher office anymore," Peterson said of Walker. "He ought to consider going after this money instead of these obscure objections to the ACA.

"At some point they need to move on," he said.

The lawsuit challenging the fee imposed on insurance companies and passed on to states initially was filed by Texas, Louisiana and Kansas in October in the Wichita Falls division of the Northern District of Texas.

Wisconsin, Nebraska and Indiana were added in an amended complaint filed last week.

The fee on insurance companies was among the myriad taxes imposed by the law to help pay for the cost of expanding insurance coverage.

By requiring states to reimburse the insurance companies, also known as managed care organizations, for the fee, the federal government has imposed the taxes on the states, the lawsuit alleges.

It seeks an injunction against the rule as well as reimbursement from the federal government.

The only cost to Wisconsin for participating in the lawsuit is staff time, Anne Schwartz, a spokeswoman for the Office of Attorney General Brad Schimel, said in an email.

Timothy Jost, an emeritus professor at the Washington and Lee University School of Law and an expert on the complexities of the Affordable Care Act, said he doesn't believe the lawsuit has much merit.

"The states don't have to participate in Medicaid," Jost said. "But if they do, they have to play by the rules, and this is a pretty garden-variety rule."

In a blog post for Health Affairs, a policy journal, in October when the lawsuit was first filed, Jost wrote that the states also pay substantial amounts to cover other federal taxes paid by Medicaid managed care organizations, such as payroll taxes.

In all likelihood, the lawsuit could take years to work its way through the courts. But it could suggest that Walker, a steadfast opponent of the Affordable Care Act, is unlikely to reconsider his position if a Democrat wins the presidential election in November.

"We have and will continue our work to protect taxpayers from the costly consequences of the ACA," Patrick said in the email.