An Overview of Health Care Issues in the 2013-15 Budget


June 20, 2013

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Spending More State Dollars to Cover Fewer Wisconsinites through BadgerCare

A key issue in the Department of Health Services (DHS) budget and in the budget bill as a whole is how Wisconsin will use the Affordable Care Act (ACA) to help improve access to health care. Governor Walker’s answer was to partially close the current gap in BadgerCare by extending eligibility to all adults below the poverty level who don’t have children, while cutting in half the current income eligibility ceiling for parents and caretakers. The Legislature supported the Governor’s proposal. 

Under the terms of the ACA, states that cover childless adults to 133% of the federal poverty level (FPL) can get full federal funding for the cost during the first three years (2014 through 2016), phasing down to 90% federal financing in 2020 and thereafter. Because the Governor’s plan stops at 100% of FPL, the state will continue to have to pay its regular share of Medicaid spending, which is 41% of the total. To offset that cost for covering about 82,000 more childless adults below the poverty level, the Governor proposed eliminating BadgerCare coverage of nearly 90,000 parents and several thousand childless adults over the poverty level. 

The Legislative Fiscal Bureau (LFB) analysis of the various options indicated that Wisconsin could cover far more adults in BadgerCare at far less state expense by expanding eligibility of childless adults to 133% of FPL and qualifying for the full federal funding. The following are some of the highlights of the portions of that preliminary LFB analysis relating to the comparative cost of capping eligibility of parents and childless adults at the poverty level, versus covering childless adults and parents to 133% of the poverty level. 

Capping Adults at 100% of FPL vs. Covering Childless Adults and Parents to 133%

 

+ $149 million

Higher state cost of JFC bill in 2013-15 (compared to covering childless adults and parents to 133% of FPL).

+ $490 million

Higher state cost of JFC bill from Jan. 2014 through June 2020.  (LFB)

– 89,000

Number of parents now enrolled in BadgerCare expected to lose coverage under the Governor’s plan.  (Many of these parents will become uninsured.)

– 85,000

Fewer adults in BadgerCare under the Governor’s plan. (DHS estimate)

28,000

Larger number of people uninsured under the Governor’s plan –compared to covering adults to 133% of FPL.  (DOA estimate)

 

The Finance Committee approved the Governor’s plan, but acknowledged that some of the parents who lose coverage will be uninsured, which is expected to increase the uncompensated care provided by hospitals.  With that in mind, the committee was persuaded to add (in the 2013-15 biennium only) $30 million of state GPR funds and about $43 million of federal matching funds – targeted to hospitals who provide a “disproportionate share” of the uncompensated care.  The GPR cost figures in the table above reflect the added $30 million 

Coverage for Children and Pregnant Women

The budget bill does not directly affect BadgerCare eligibility of children (except those above 300% of FPL) – thanks to “maintenance of effort” provisions in the ACA that don’t allow states to reduce their eligibility-related standards for children until 2019.  However, the budget codifies into state law proposals made by DHS in 2011 that could cause about 29,000 children to lose their BadgerCare coverage when the ACA provision expires in 2019 (or sooner if a federal waiver is approved).

 Additionally, children in families above the poverty level may be adversely affected in several ways by the changes. First, the department is still proposing to reduce benefits for some people in BadgerCare, and that could include children. Second, parents and children now in BadgerCare will often be split into different health plans. Third, states with more restrictive eligibility of parents tend to have lower enrollment of children than states that cover more parents. Also, the bill would end the ability of families above 300% of FPL to buy BadgerCare coverage for their children at full cost.[1]  

Governor Walker’s budget proposed restricting BadgerCare coverage of pregnant women above 133 percent of the poverty level (who are currently eligible up to 300% of FPL); however, the budget passed by the Legislature restores coverage of pregnant women by incorporating a recommended change from the Governor. As the proposed bill was written, it would have shifted pregnant women over 133% of FPL into the BadgerCare Prenatal program, which provides “pregnancy-related” services on behalf of their “unborn child.”  We were relieved to see this shift in coverage removed, since there are numerous drawbacks to the BadgerCare Prenatal program, compared to full-BadgerCare. Making such a shift could limit the scope of coverage, restrict eligibility for women with employer-sponsored coverage, put a larger portion of pregnant women into more expensive “fee-for-service” care, and cause delays and interruptions in coverage that can be problematic for the women and the state.

Regulation of Marketplace Navigators

The budget provisions relating to the state Office of the Commissioner of Insurance (OCI) were amended in JFC to require OCI to license and register Navigators. The federally funded Navigator program that will operate in Wisconsin will help people find and enroll in coverage through the federally-facilitated health insurance marketplace under the ACA. Navigators will be subject to licensing, registration, bonding, fingerprinting, background checks, training, and examination. There are also other assistors who will help with outreach and enrollment in new health insurance options, who will be required to register with, OCI and certified application counselors will be required to meet the training and examination requirements that apply to Navigators (to be created by OCI rulemaking authority). Advocate are concerned that the proposed state rules could make it impossible for those already doing enrollment work in our state to continue doing so, when we need them the most.

Increased Funding in the DHS Budget

The budget increases state support for the Department of Health Services by a total of about $851 million GPR during the biennium. Most of that increase, about $676 million, is simply the cost of maintaining the status quo, while addressing the upward pressure on spending from things like demographic changes, underlying enrollment trends, inflation, and a decline in the federal share of

Medicaid spending (because of a formula that decreases the federal match rate when state income improves).

Specific areas of increased state spending in the DHS budget include the investments in mental health care discussed below, as well as the following items:

  • $30 million GPR to hospitals as one-time funding this biennium to offset the cost of uncompensated care.
  • $36.2 million GPR for administration in DHS and the Income Maintenance County Consortia of ACA and BadgerCare eligibility changes.
  • $14.4 million GPR for the state share of increased spending for job training and employment assistance for Food Share recipients, primarily as a result of restoring work and job training requirements for able-bodied adults who don’t have dependents.
  • A $5.2 million GPR increase in the second year to fully fund the projected cost of the AIDS drug assistance program.
  • $8.8 million GPR over the biennium to reflect a reestimate of the cost of the Supplemental Security Income program.
  • $5 million GPR for the Wisconsin Health Information Organization (WHIO), which is an organization focused on improving transparency of cost and quality health care data.
  • $5 million to make grants to consortia of health care providers to support the cost of developing and offering graduate education programs for physicians, and $1.5 million to create a grant program to support the costs of medical residency programs.
  • $4.7 million in one-time funds over the biennium to support local response costs related to a tuberculosis incident in Sheboygan County.

Improving Access to Mental Health Care

The budget includes $29 million in new state funds for mental health programs. The investments include:

  • Comprehensive Community Services: The bill expands community-based care for a recovery-based psychosocial rehabilitation program for adults and children with severe mental illness. These funds relieve some of the county funding pressures for mental health, and ensure that there will be supports in all counties. JFC modified the Governor’s proposal by transferring the GPR funding to the JFC supplemental appropriation, to be released after DHS submits a report to the committee.
  • Office of Children’s Mental Health: This new office would be created within DHS to study, recommend, and coordinate initiatives to improve the integration of mental health services provided to children and monitor performance. JFC required the Office to submit an annual report to the legislature. The budget also proposes $535,000 in increased funding for children’s mental health services.
  • Coordinated Services Team: These wraparound, community-based models of care for children with behavioral health issues will be expanded statewide with regional coordinators.
  • Peer-Run Respite Centers: These centers would be developed to improve outcomes through peer supports, 24/7 hotlines, respite, wellness activities, and hospital diversion.
  • In-Home Counseling for Children: The budget includes funding to provide in-home counseling through Medicaid to improve access to services and promote earlier interventions.
    • Two Additional Forensic Units at Mendota Health Institute: The bill provides funding and positions to increase the capacity for inpatient evaluation and treatment services.

    Health Care for People with Disabilities

    • Family Care – The budget provides no additional funding to help expand the Family Care and IRIS programs into additional counties.
    • Medical Assistance Purchase Plan – The Governor’s proposed bill made a couple of significant policy changes in MAPP, which is a buy-in program that allows working people with disabilities to purchase Medicaid if they have income or assets too high for traditional eligibility. On the plus side, the bill changes the way unearned income is treated in calculating premiums, which will significantly reduce the premiums for people with large SSDI checks. On the negative side, the bill will make people ineligible for MAPP if they are not working at a job that requires the withholding of Social Security and Medicare taxes. This would remove MAPP as an option for people whose disability is too significant to allow them to work a regular job. However, JFC removed these provisions from the budget.

    Other Health Care Appropriations of Note

    Some of the notable health care budget issues outside DHS include the following:

    • University of Wisconsin:
      • The UW budget includes $3.75 million for the Carbone Cancer Center to expand access to molecular imaging services to cancer patients in 17 oncology care sites throughout the state (contingent upon receipt of federal matching funds).  JFC deleted the GPR funding and required the Board of Regents to allocate the money from its program revenue and submit a plan for the expenditure to the committee.
      • The bill provides $1.5 million GPR each year to UW Madison for expansion of the Wisconsin Academy for Rural Medicine and the Training in Urban Medicine and Public Health programs.  JFC deleted the GPR funding and required the Board of Regents to allocate funds from UW’s program revenue.
    • Higher Education Aids Board – The HEAB budget includes about $520,000 GPR to increase the state’s contract with the Marquette University School of Dentistry to increase the number of dental students eligible for subsidies by 20 in 2013-14 and 40 in 2014-15.

    Jon Peacock and Sara Eskrich




[1] The ACA’s maintenance of effort protection for children does not apply to unsubsidized coverage, such as Wisconsin’s BadgerCare coverage for children over 300% of FPL.