$900,000 per Month Increase in DOC Costs Is One of Several Unintended Effects
Rather than accepting enhanced federal Medicaid funds, the Governor proposes to pay for a 3-month delay in BadgerCare eligibility reductions by also delaying positive aspects of the budget bill, including the expansion of coverage for adults who don’t have dependent children. Obviously, the most disappointing aspect of financing the bill in that way is that the Governor is breaking his promise not to create a coverage gap for low-income childless adults. Another smaller and much less obvious problem is that the Special Session bill being considered by the Joint Finance Committee on December 2nd creates a $2.8 million GPR hole in the Department of Corrections budget.
The expansion of coverage to include adults without dependent children is projected to save the DOC about $900,000 per month by picking up a significant portion of the cost of hospitalizing inmates. Read more
There are a lot of ways in which America’s free market health care system boosts cost to levels far in excess of the costs anywhere else in the world, even though Americans aren’t healthier, and don’t appear to be getting the best health care. Most of those ways are perfectly legal; others not so much.
Once in a while a health care corporation that is exploiting the opportunities to maximize profit in unethical or illegal ways is called on the carpet and forced to pay restitution for their shady exploits. There have been two examples of that in the last week or so, and both could help Wisconsin fill a hole in the state’s Medicaid budget.
Last week the U.S. Department of Justice announced that Johnson and Johnson will pay $2.2 billion to settle a lawsuit related to deceptive marketing and distribution of two antipsychotic drugs, Risperdal and Invega. The drug company misrepresented what the drugs should be allowed for, and allegedly paid kickbacks to doctors and agencies to make sure their drugs were prescribed for certain off-brand purposes. Read more
Tiff over WI and MN Insurance Rates Rekindles Debate about BadgerCare
A dispute emerged last week over the difference between premiums for health insurance purchased through the new Marketplaces in Minnesota and Wisconsin. The squabble between Citizen Action of Wisconsin and the Insurance Commissioner’s Office has rekindled debate over the effects of the decision by the Governor and Wisconsin legislators to turn down federal Medicaid funding and cap BadgerCare eligibility at 100% of the federal poverty level.
Although I don’t feel qualified to comment on all the various reasons that the rates in the new Marketplace in Wisconsin seem to be considerably higher than those in Minnesota, I think it’s important to understand how the choices states made about Medicaid eligibility are affecting the rates charged by insurers participating in the Marketplaces.
Growth in Per Capita Income Is Expected to Cause $52 Million Increase in Wisconsin’s Share of Medicaid Spending
Wisconsin Share and Fluctuations in Cost-sharing Would be Reduced if State Took Enhanced Medicaid Funding
Wisconsin Health News reported this morning that our state will probably have to spend $52 million more from state General Purpose Revenue (GPR) because of a drop in the federal share of Medicaid spending (known as the Federal Medical Assistance Percentage, or FMAP). A Legislative Fiscal Bureau (LFB) memo issued yesterday estimated the increase in the Wisconsin share, based on a reestimate of the FMAP in FY 2015 by an organization called Federal Funds Information for States (FFIS). The reduced federal share results from per capita income growth in our state.
It will be interesting to see if state officials use the reduction in federal funds to argue that it’s perilous to take Medicaid dollars, so it was wise not to accept the enhanced federal funding under the Affordable Care Act (ACA). However, I would argue just the opposite. Read more
Workers in Wisconsin and across the U.S. must still cope with a relatively weak labor market. That is especially challenging for low-wage workers who are struggling with the declining value of the minimum wage, reductions in employer benefits like health care, and growing inequality. Those challenges are exacerbated in Wisconsin by budget decisions made by state lawmakers.
A new Wisconsin Budget Project issue brief examines how the how state budget choices are affecting low-wage workers in Wisconsin. It focuses primarily on the effects of the new budget bill, but also examines a few instances of how that bill continues or compounds the challenges for low-wage workers caused by the 2011-13 budget.
Some of the major effects include the following policy choices relating to health insurance, child care, taxes and unemployment insurance:
Making health insurance and care much more expensive for many parents now in BadgerCare
The 2013-15 budget bill cuts in half the income eligibility ceiling for adults participating in BadgerCare – reducing that cap from 200% of the federal poverty level to just 100%. Read more
Committee Adds $30 Million GPR to Assist Hospitals with Higher Uncompensated Care Costs
This afternoon the Joint Finance Committee (JFC) approved the Governor’s plan to expand BadgerCare to cover about 80,000 additional childless adults who are below the poverty level, which is financed primarily by making almost 90,000 parents over the poverty level ineligible for BadgerCare. However, the Governor underfunded the plan, and the omnibus motion approved today by JFC (by a party-line vote of 12-4) adds $106 million GPR to the bill.
Part of the increased spending is because of the one significant change the committee made to the Governor’s proposal. They added $30 million GPR and $43.6 million of federal matching funds to help hospitals with the higher cost of uncompensated care that is expected after the state cuts in half the current income eligibility ceiling for parents.
With the added funding for hospitals (which is just for the 2013-15 biennium), the Governor’s plan is now expected to cost state taxpayers about $490 million GPR more during the period 2014 through fiscal year 2021, compared to the BadgerCare compromise offered by Democrats on the committee. Read more
The Joint Finance Committee (JFC) convenes again on Tuesday, June 4, in what is expected to be its last meeting on the biennial budget bill. The committee has to tackle three of the biggest parts of the budget – tax policy, K-12 education financing (including school vouchers), and Medicaid issues.
Many members of the majority party have said that they would like to provide more funding to public schools than the very small amount recommended by the Governor. But they have to balance their interest in doing that – by using some of the general fund surplus and increased tax growth in the next biennium – with their desire to use that funding to cut income taxes more than the Governor proposed.
Also, as I noted in Wednesday’s blog, proponents of the tax cuts have to balance the size of those cuts with the higher GPR cost of the Governor’s BadgerCare plan – which covers a lot fewer people at a much greater cost ($119 million more in 2013-15 and $460 million more from January 2014 through June 2020). Read more
Conservative members of the Joint Finance Committee (JFC) who support the Governor’s BadgerCare changes are in a tough spot. On the one hand, they don’t want to add funding to the budget, and would like to free up as much funding as possible for income tax cuts. On the other hand, they don’t want to take the enhanced Medicaid financing from the Affordable Care Act (even though it would allow the state to do a much better job of closing the large gap in BadgerCare coverage and reducing uncompensated care for hospitals). A new Legislative Fiscal Bureau (LFB) paper makes it clear that those two objectives are at odds.
The LFB paper (#321) compares three basic alternatives relating to possible changes in BadgerCare: 1) the Governor’s plan, which caps eligibility of parents and childless adults at 100% of the federal poverty level (FPL) and has the effect of cutting in half the current eligibility limit for parents; 2) covering parents and childless adults to 133% of FPL; and 3) covering childless adults to 133% and retaining current eligibility of parents (up to 200% of FPL). Read more
The budget plan introduced today by House Budget Chairman Paul Ryan looks a whole lot like the plan that Ryan and Romney campaigned on last fall. However, it’s not that it hasn’t changed at all, because he proposes even deeper cuts in income tax rates this time — to undo the tax measures enacted in early January as part of the compromise that avoided the fiscal cliff.
The following are some of the noteworthy aspects of the Ryan budget, drawn from a 4-page critique issued late today by Robert Greenstein of the Center on Budget and Policy Priorities:
- Unspecified tax offsets – The current budget plan, like the one Romney proposed, would make a deep cut in the top income tax rate, and purports to offset the cost of that by closing tax loopholes. In the months since the election, Ryan still hasn’t come up with a single offset that he is willing to offer publicly as a way to make the rate cuts revenue neutral.
Wisconsin can cover a lot more people at a much lower cost to the state by using the Affordable Care Option option to finance BadgerCare coverage for all childless adults below 133% of the federal poverty level (FPL), instead of the narrower expansion the Governor recommends.