LFB Analysis Says Closing BadgerCare Gap Would Save Nearly $44 Million in 2013-15

Tuesday, February 5, 2013 at 7:25 PM by

Bill to Strengthen BadgerCare Unveiled, Fiscal Bureau Memo Calculates Savings

Democrats in the Wisconsin Legislature held a press conference Tuesday urging Governor Walker to follow the lead of several GOP governors who have recently announced that they will seize the opportunity provided by the health care reform law to significantly improve access to health insurance and boost the economies in their states.  They will accomplish that by using federal funding to close current gaps in Medicaid coverage.  (See our blog post Monday about the announcement made by Gov. Kasich of Ohio, and today’s WCCF post about the Madison press conference.)

Rep. Richards, Sen. Erpenbach and others unveiled a bill called the Strengthen BadgerCare Act.  The bill accomplishes what the Wisconsin Hospital Association recently called for:  providing BadgerCare coverage to adults below 133% of the federal poverty level (FPL) who don’t have dependent children.  A Legislative Fiscal Bureau (LFB) memo released today indicates that Wisconsin would save about $66 million over the first three years (2014 through 2016), including $43.7 million in the 2013-15 budget.  Over the period through fiscal year 2010, the LFB projects a net state cost in the range of 0.4% to 1.5% of the increase in BadgerCare spending over that six and a half year span. 

There are two ways the bill would reduce the state-financed portion of spending for Wisconsin’s BadgerCare Core program, which now covers about 20,000 childless adults.  First, for those adults with incomes below 133% of FPL, the federal reimbursement rate is expected to be 100% over the first three years, and then gradually decline to 90%, rather than the current 60% federal share.  Second, the bill would end BadgerCare coverage for a rapidly dwindling group of childless adults over 133% of FPL, who would need to seek subsidized coverage through the new health insurance exchange.

Here are some of the key assumptions and findings in the LFB analysis:

  • The Fiscal Bureau projected the cost and savings from January 2014 through June 2020 of two different enrollment scenarios – one with an increase in enrollment of childless adults to 125,000 (compared to about 20,000 now), and another with enrollment of 175,000 childless adults.  
  • Under either of those scenarios, the state is expected to save nearly $66 million over the next three fiscal years.
  • Compared to the state cost of BadgerCare Core this year, the state share of the costs from 2014 through mid-2020 would decrease by an average of roughly $10 million a year, assuming the higher enrollment level, and by nearly $20 million a year less for the lower enrollment scenario.
  • Since the current moratorium on new enrollment in BadgerCare Core is rapidly reducing program participation, the savings don’t appear as large when they are calculated relative to the LFB’s projections of falling Core Plan spending in coming years.
  • Measured that way, the the fiscal effect through mid-2020 would be an average annual increase in state spending for childless adults $2 million under the lower enrollment scenario and about $10 million per year using the higher enrollment level.
  • Using that more conservative point of comparison, the LFB analysis finds that the higher enrollment scenario would increase federal spending by almost $4.4 billion during the next six and a half years, and the federal funding would cover 98.5% of total costs during that period (or 99.6% under the lower enrollment scenario). 

The LFB estimates are based on just the direct effects of the decision to close the gap in BadgerCare, and not on other costs and benefits of the Affordable Care Act.  For example, the figures don’t include costs relating to additional enrollment of already-eligible adults and children because of the individual mandate and other policy changes that are that are independent of the choice regarding childless adult coverage.  Similarly it doesn’t include savings from an increase in the federal matching rate for kids in CHIP eligibility categories, or potential savings from reductions in uncompensated care. 

The LFB has also prepared a thorough summary of the “Strengthen BadgerCare Act.” 

Jon Peacock 

Categories: 2013-15 biennial budget, BadgerCare Plus, Blog, HEALTH & HUMAN SERVICES, health care reform, Medicaid, STATE BUDGET | Comments Off on LFB Analysis Says Closing BadgerCare Gap Would Save Nearly $44 Million in 2013-15

Comments are closed.