DHS Report Provides Mixed News on Wisconsin’s Medicaid Finances

Friday, June 29, 2012 at 10:50 PM by

Cost-savings Initiatives Appear to Be on Track to Balance Medicaid Budget

A quarterly report released late Friday afternoon by the Department of Health Services (DHS) provides both good and bad news about Wisconsin’s Medicaid budget. At first blush, the numbers look worse than those contained in the last quarterly report, but upon closer inspection the state still seems to be on track to close the Medicaid deficit.

Let’s start with the bad news and then move to the positive aspects of the new report to the Joint Finance Committee. Here are the two worrisome parts:

  • The federal Medicaid match rate for Federal Fiscal Year 2013 is going to be less than what the state expected (59.7% instead of 60.3%), and that decrease – which results from a formula that accounts for things like changes in state personal income – is expected to cost the state about $30 million over the remainder of the biennium.
  • Before accounting for various cost-saving measures, DHS raises the projected deficit figure to $148.9 million GPR – partly because of the $30 million reduction in federal match and partly because the state has now added into its calculations the cost of lifting the Family Care enrollment cap.

However, there are a number of countervailing factors that help get the Medicaid budget back into the black:

  • The expected cost of lifting the Family Care cap has come down to $46.9 million GPR (compared to an earlier estimate of $80 million).
  • The Family Care figure is the gross cost; it doesn’t take into account any of the long-term care efficiencies that DHS previously said would fully offset the increased spending.
  • The $148.9 million figure for the deficit also doesn’t take into account an anticipated $25.4 million GPR spending cut from the BadgerCare changes that begin in July and $79.7 million GPR of savings from other Medicaid efficiencies.
  • Enrollment levels are now expected to be a little lower than previously expected in both years of the biennium.

In general, the new figures are about what I was anticipating, except I didn’t expect a $30 million drop in the federal matching funds. Notwithstanding that piece of bad news, DHS states that when you take into account their cost-saving plans, “we are on course to remain within the Act 32 budgeted level.”  I think that’s a reasonable assessment.

The DHS report doesn’t appear to be available online yet, but you can read more in Patrick Marley’s  article in the Journal Sentinel.

Jon Peacock

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