Cost of Wisconsin's stance on the Affordable Care Act: $1.1 billion through this fiscal year

Guy Boulton | Milwaukee Journal Sentinel

One billion dollars is roughly what the state budget allocates each year to the University of Wisconsin System.

It is roughly the cost of linking the Marquette and Zoo Interchanges.

And it is the federal money that Wisconsin has turned away since 2014 because of its unique take on the Affordable Care Act.

Wisconsin is the only state in the country that partially expanded eligibility for Medicaid while not accepting the additional federal dollars available through the law.

The cost: an estimated $1.1 billion through the fiscal year ending June 30, according to the most recent analysis by the Legislative Fiscal Bureau.

Gov. Scott Walker and the Legislature’s decision is again an issue in a gubernatorial race. Walker stands by his decision. Tony Evers, the Democratic candidate for governor, has said he would accept the federal money available through the law.

Thirty-three states have expanded or plan to expand their Medicaid programs through the Affordable Care Act. And three — Utah, Idaho and Nebraska — have ballot measures this November on whether to expand their programs.

No other state, however, has taken Wisconsin’s approach.

Here’s what sets Wisconsin apart:

The Affordable Care Act paid 100 percent of the cost of states’ expanding their Medicaid programs through 2016. The federal government’s share gradually drops to 90 percent by 2020. It is 93 percent next year.

To receive the federal money, states had to expand their Medicaid programs to cover adults with incomes up to 138 percent of the federal poverty threshold, or $16,753 this year, who previously were not covered. In Wisconsin, these were adults without dependent children.

Wisconsin instead expanded its Medicaid program to cover adults with incomes up to 100% of the federal poverty threshold, or $12,140 this year.

At the same time, Wisconsin stopped covering adults with dependent children in households with incomes above 100 percent of the threshold, because they now could buy subsidized health plans sold on the marketplaces set up through the Affordable Care Act.

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BadgerCare Plus, the state’s largest Medicaid program, covered 148,156 adults without dependent children in September.

The decision to cover adults up to 100 percent of the poverty threshold — instead of 138 percent — and forgo the additional federal money is what will have cost the state $1.1 billion through this fiscal year.

Medicaid is funded by federal and state tax dollars, and the federal government still is paying for part of the cost of the state’s expanding eligibility for Medicaid.

But the federal government is paying the standard match for the program — 59 percent instead of 93 percent to 94 percent it would pay this year and next under the Affordable Care Act.

The difference is an estimated $403.3 million in the current biennium, according to the Legislative Fiscal Bureau.

The Legislative Fiscal Bureau estimates that 80,000 adults would be expected to sign up for coverage if the state expanded Medicaid eligibility to 138 percent of the poverty threshold — the cutoff required to receive money through the Affordable Care Act.

This would cost the state some money. But the net savings works out to about $200 million a year.

That’s about 1.1 percent of the $17.7 billion of state funds in the budget for the current fiscal year.

Walker has said that people benefit from being covered by commercial health plans sold on the marketplaces set up through the Affordable Care Act.

Their coverage still is subsidized by the federal government, but they have more choices than they would have if they were covered by Medicaid.

They also can remain with the same health plan if their incomes increase above the cutoff for coverage in Medicaid. And they can change plans each year.

“We are trying to make sure they can find access to affordable health care but without being dependent on a government program,” Walker said in April.

Supporters of the state's approach contend there are other potential advantages.

Being enrolled in a commercial health plan helps people develop an understanding of insurance. Commercial health plans often provide better access to physicians. And commercial health plans pay higher rates.

The rates paid by Medicaid programs, such as BadgerCare Plus, typically don’t cover the cost of providing care for hospitals, physicians and other health care providers.

Assembly Speaker Robin Vos has vowed never to accept the federal money for expanding eligibility for Medicaid partially for this reason.

“Why would I put more people into a system that’s not even paying its own way?” he asks.

Yet the Wisconsin Hospital Association and the Wisconsin Medical Society have encouraged the governor and state lawmakers to accept the additional federal dollars available through the Affordable Care Act.

The Wisconsin Medical Society also would support the state’s seeking approval to use the additional federal dollars to allow people to buy health plans on the marketplaces.

Several states have taken that approach.

Others also have pushed for the state to accept the additional federal money.

“The huge sums of federal money we are leaving on the table could be used to strengthen our state by improving schools, increasing student financial aid, filling potholes and many other investments,” said Jon Peacock, research director for Kids Forward.

For example, access to dental care for children and adults covered by Medicaid programs has been a problem for more than 15 years in Wisconsin because of the low rates paid to dentists.

BadgerCare Plus and the state’s other Medicaid programs spent $101.4 million in the 2017 fiscal year on dental care. The state’s share of the cost was roughly $41.5 million, with the federal government paying the balance.

The $200 million in potential annual savings from accepting the federal money from the Affordable Care Act could enable the state to double what it pays dentists — and the state still would have $160 million a year to spend elsewhere.

“That would be huge,” Peacock said.

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Another example is the state could double financial aid — now about $143 million a year — for students who are going to state universities and technical schools.

Peacock and other supporters of accepting the federal money can cite others.

“In a nutshell, the approach pushed through by the governor is costing the state a lot more and accomplishing a lot less,” Peacock said.