A Summary of the Finance Committee’s Budget for Health Care

September 12, 2017

pdficonPDF version

The 2017-19 budget bill approved by the Joint Finance Committee (JFC) contains many new requirements for participation in public assistance programs. However, relative to Governor Walker’s previous budgets, the health care portion of the latest budget bill makes relatively modest changes in health care funding and policy. Although the bill contains a few significant changes in BadgerCare and Medicaid policy, it is possible that much more substantial changes will be debated later this session if Congress approves proposals that could radically transform Medicaid.

Medicaid Cost Growth Slows

health budget

One bit of very good news over the last year has been that Medicaid spending increased by only about half the amount anticipated. That freed up state savings that boosted the state budget balance, and also contributed to a much smaller than usual increase in the projected spending in the 2017-19 budget.

The revised budget increases the state share of Medicaid spending by $183 million over the next two fiscal years (relative to the 2016-17 appropriation), simply tomaintain the status quo. But as the bar graph illustrates, that’s a far smaller increase than the state has needed to make in the past three budget bills to maintain the base level of services. The slowing growth reflects recent reductions in BadgerCare caseloads, lower-than- expected increases in costs per participant, and an increase in the federal share of costs for Wisconsin.

Work Requirements for Some Medicaid Recipients

The public assistance changes in the budget bill include a requirement in several programs that non-elderly, able-bodied adults must either be working or participating in a work training program. The bill directs the Department of Health Services (DHS) to seek a federal waiver that could impose a similar requirement upon childless adults in BadgerCare. Advocates are very concerned that such a requirement would deny access to essential health care services for many people who face challenges that keep them from maintaining steady employment, such as mental illness, addiction, drivers licenses that have been suspended for failing to pay fines, and lack of child care for the available work shifts.

The bill also recommends changes in the work requirements and premiums for the Medicaid Purchase Plan (MAPP) and Medicaid income eligibility for people who are elderly, blind, or disabled. MAPP is a work-incentive program that enables people with disabilities who earn more than 100% of the federal poverty level (up to 250% of FPL) to access needed Medicaid services and supports. The proposed changes are the culmination of long deliberations with advocates, who now support the revisions. While the Joint Finance Committee accepted the Governor’s proposed changes, it eliminated funding for additional positions that DHS requested to support implementation.

Some Targeted Increases for Children’s Health Care

The revised budget contains a number of changes relating to children’s health. These include:

  • An increase of nearly $16 million in state funds over the next two years to eliminate the waiting list for long-term supports for children with developmental disabilities, physical disabilities, or severe emotional disturbances;
  • A $1 million dollar increase in funding to expand the Child Psychiatry Consultation Program. CPCP seeks to alleviate the significant shortage of child and adolescent psychiatrists in the Milwaukee area and rural northern regions of Wisconsin by providing primary care providers access to: mental health education; a referral support system for pediatric patients; and a daily case consultation for primary care providers through email or phone with a child psychiatrist, psychologist, or mental health coordinator;
  • An increase of about $6 million recommended by the Governor for School Mental Health Initiatives to help improve access to mental health services for students by: increasing the availability of social worker services in schools, funding grants for school-linked mental health services, and helping to train school personnel in mental health first aid and trauma-informed care; and an additional $750,000 added by JFC for community and school mental health collaboration grants;
  • An updated definition for lead exposure to be consistent with the Center for Disease Control’s current standard, and increased reimbursement for lead investigations; and
    About $1.2 million of state funding to establish a children’s crisis treatment and stabilization facility to assist children who are in crisis or requiring short-term crisis stabilization. Funding was allocated on a one-time basis, and DHS is required include a proposal in their next budget to provide ongoing funding.

Other Health Care Measures

The revised budget includes 2% per year increases in the rates for personal care workers and also for nursing home provider rates. Although those small rate increases are welcome, they fall far short of what is needed. The “Wisconsin Budget for All” proposal endorsed by Kids Forward and many other advocacy groups recommended a $70 million boost in state funding to help support the long-term care workforce.

The bill includes a number of investments related to mental health services for adults and substance use. Those include $6.2 million in new state funds for mental health initiatives in the corrections system, and $3 million to increase services to OWI offenders. The budget also includes $450,000 in funding for development of a veteran-run respite home to provide peer support to veterans with mental health and/or substance use challenges. Funding was authorized for one year only, so DHS will have to determine ongoing program funding.

One of the changes approved by the Joint Finance Committee is the addition of about $30 million per year in state and federal funds for hospitals that serve a “disproportionate share” of Medicaid participants.

The budget bill counts on a source of enhanced federal funding that may be at risk – the much higher reimbursement rate authorized by the Affordable Care Act (ACA) for the Children’s Health Insurance Program (CHIP). If Congress fails to continue that increase, the federal share of CHIP spending would drop by 23 percentage points, which would cost Wisconsin about $6 million per month.

In the coming weeks, Congress might vote again on major changes to the ACA and also is likely to debate radical changes to the structure and financing of Medicaid. Depending on the outcome of those debates and other potential cuts to the federal budget, state lawmakers may need to revisit the Medicaid budget, and wide-ranging changes to reduce eligibility or services might be on the table.

Jon Peacock