Medicaid Options Create Budget Conundrum for Conservative Members of the JFC
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). The second and third options would qualify Wisconsin for the enhanced federal Medicaid financing.
The Fiscal Bureau analysis shows that there are three substantial challenges for the legislators inclined to support the Governor’s proposal:
- His plan costs $119 million more in state GPR funds than option #2 (above), even though it would cover 84,700 fewer adults in BadgerCare. And between now and the end of fiscal year 2020 the Governor’s plan would cost $460 million GPR more.
- The Governor underfunded his plan, and it requires adding $52 million GPR to the bill; whereas the committee would be able to reduce GPR spending by almost $67 million by approving alternative #2 (or by $23.7 million by approving the third alternative, which retains the current eligibility standard for parents).
- The budget also underestimated by $21 million GPR the cost of maintaining the current Medicaid programs. That problem is the same for all of the options, but the larger hole in the Medicaid budget adds to the pressure for choosing one of the alternatives that would save money, rather than cost more.
In a mid-January blog post I quoted Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University, who said that most states would eventually take the enhanced federal financing for the following reason:
“Usually, in the history of the world, math trumps ideology.”
The JFC vote next week on paper #321 may put that proposition to the test. Read more about the LFB analysis in this WCCF blog post.