One Year Later: Big Changes to Health Care

Monday, July 9, 2012 at 4:00 PM by

Big Change #3: Shifts in BadgerCare Policy and Policymaking

Now that we’ve reached the mid-point of the state’s two-year budget, we will soon begin to see the effects of significant changes in BadgerCare policy that grew out of cuts made in the last budget bill and a dramatic shift in policymaking authority to the executive branch.

Although the changes that are beginning to be implemented this month will cause an estimated 17,000 adults to lose their BadgerCare coverage, those changes are much smaller than what the Department of Health Services (DHS) proposed last fall. The narrower cost-cutting is because federal officials concluded that the “maintenance of effort” requirements in the health care reform law cannot be waived and do not permit Wisconsin to reduce eligibility or increase premiums for children or for lower income adults.

Before we summarize the changes made in the biennial budget, it should be noted that the cuts could have been significantly worse. Commendably, the Governor’s budget added about $1.07 billion in state General Fund revenue in the 2011-13 budget – partially to offset the loss of more than $650 million of federal funding after the expiration of enhanced Medicaid assistance provided by the Recovery Act (which allowed the state to reduce its share of Medicaid spending) and partially because of the significant increase in BadgerCare enrollment during the recession. Yet despite the increase in state funds relative to the 2010-11 base level, total state and federal funding was cut by about $800 million relative to the projected cost of maintaining the prior level of Medicaid benefits.

The following is an overview of the changes in the budget and budget repair bills:

Dramatic shift in health care policymaking authority – Those two bills granted DHS sweeping authority to change state laws relating to Medicaid and BadgerCare. DHS now has unprecedented power to make policy changes that supersede conflicting portions of state statutes. Public input is minimized because the changes can be made without using rulemaking or holding a public hearing. The new DHS authority is scheduled to expire at the end of 2014, when the Governor’s term expires. (For more on the power shift, see this June 2011 WCCF paper.)

BadgerCare eligibility and premiums – As WCCF explained in a recent blog post, thousands of adults will start losing their BadgerCare coverage this month because of the changes to BadgerCare that took effect on July 1, 2012. Read that post for a summary of the changes, and see our May 2012 paper for an explanation of how the changes being implemented compare to the much broader changes proposed last fall by DHS.

BadgerCare benefits and co-pays – DHS is still seeking federal approval of a proposal to create a plan with much higher co-pays and more limited benefits, for children and parents with income over the poverty level. If it is approved, the Alternative Benchmark Plan would adversely affect more than 300,000 BadgerCare participants.

Family Care – The budget bill imposed a moratorium on expansion of Family Care into additional counties and froze enrollment in counties already operating this community-based long-term care program for the elderly and people with disabilities. Thanks in part to a federal order, the Governor and Legislature approved SB 380, which lifts the freeze and allows the program to expand to all counties (if the Joint Finance Committee approves). That reversal was one of the bright spots of the session.

BadgerCare for adults without dependent children – Funding was included in the budget bill to lift the moratorium on new enrollment in the BadgerCare Core Plan, which provides a core of benefits to adults who aren’t custodial parents of minor children.  However, enrollment has been dropping rapidly as DHS resists lifting the moratorium that was first imposed in October 2009.  As a result, the Core Plan now only covers only about 24,000 people and has a waiting list of more than 131,000.

Other changes – In addition to the changes noted above, here are a few other significant areas in the health care budget:

  • SeniorCare – Although the Governor proposed changes that would have significantly increased costs for some participants, the changes were rejected by the Legislature.
  • Family planning – The budget bill seeks to make big changes to the Medicaid Family Planning Waiver Program by eliminating men from the program and reducing income eligibility for women from 300% of the poverty level to 200%.  These changes have not yet gone into effect, as they require federal approval.
  • Public health – Most public health program were cut 10% by the budget bill. (Read more in our blog post from last summer.)

Wisconsin has long been a leader in improving access to health care, and our state still ranks high in the percentage of people with insurance and the quality of care. The changes noted above were a sharp change in direction from the sort of bipartisan efforts that made Wisconsin a national leader. Rather than reforming health care, this session’s changes will cause more people to become uninsured and will increase the price tag for uncompensated care – which results in cost shifting rather than cost saving.

As we look ahead, Wisconsin faces many challenges in enabling state residents to have access to quality care and holding down the cost of health care. We hope policymakers will work together to implement the Affordable Care Act and to find bipartisan ways of making our health care system more effective.

All of us need to be involved in that process, and we need to hold lawmakers accountable for the policies that are developed. For that to happen, we should insist that Wisconsin legislators take back the lawmaking responsibility for health care policy that was shifted last year to unelected state officials.

Jon Peacock

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