Under Budget Pressure, Wisconsin Hikes Medicaid Premiums

Under Budget Pressure, Wisconsin Hikes Medicaid Premiums
May 2, 2012

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)

The Wisconsin legislature’s Joint Committee on Finance has agreed on a plan to raise premiums for some working enrollees in Wisconsin's Medicaid programs. The changes were needed to sustain the program after rapid expansion and demand which surpassed estimates.

Facing a need to fill budget holes caused by the rising cost of Medicaid—called BadgerCare in Wisconsin—the Joint Committee on Finance, whose membership is divided between the Wisconsin Senate and General Assembly, approved the plan proposed by the state Department of Health Services (DHS). According to Wisconsin DHS spokesperson Beth Kaplan, the plan involves charging fees to 44,000 Medicaid participants who previously didn't have to pay.

“State funding for Medicaid had to be significantly increased above the last biennium’s budget due to federal matching funds decreasing by $1.33 billion and also because the previous budget estimates were based on a projected decline in enrollment,” Kaplan said. “After adding $1.2 billion of additional state funding for the current budget cycle, we still needed to find savings to keep the program in balance with the state budget. Our proposals allowed us to find the needed savings. We believe they are fair and commonsense.”

Kaplan says the changes, if approved by the U.S. Dept. of Health and Human Services, will give BadgerCare a future.

“At town hall meetings statewide, people told us they could contribute toward their premiums,” Kaplan said.

Significant Increase for Enrollees

According to Wisconsin State Sen. Frank Lasee (R-DePere), the change is necessary but significant.

“It’s a fairly significant increase. The maximum premium for working enrollees under the plan is very similar to what a state government worker pays for our portion of the family plan, about $200 per month,” Lasee said.

Lasee said the sheer weight of the population on BadgerCare was straining the budget.

“Even though we added an additional $1.2 billion into the Medicaid area of our budget, out of the 5.5 million people in Wisconsin about 1.2 million are on Medicaid or BadgerCare, which equals about 20 percent of our population,” Lasee said. “Even with the increase, that didn’t increase rates to doctors and providers of medical services at all—that was money we needed just to cover the bills that came with the deficit. We still needed to cut $500 million more, and that’s what forced our hand on these changes.”

Costs Left Unaddressed

Mike Ford, research director for the Wisconsin Policy Research Institute, said the changes were necessitated by the economic downturn and state Medicaid eligibility expansions under former Wisconsin Gov. Jim Doyle (D).

“What’s happened here is two things that increased eligibility for Medicaid: One, the recession, and two, the previous governor’s administration greatly increased the number of people receiving BadgerCare,” said Ford. “With the recession, Wisconsin, along with what seems like every other state, has a revenue problem. So in order to keep those most in need getting the maximum benefit from BadgerCare, there needs to be something done to rein in costs.”

Raising taxes in a recession was “a nonstarter,” according to Ford, particularly under current Republican Gov. Scott Walker.

“Another thing you could do is cut people off the rolls, which is obviously problematic,” Ford said. ”So the route the current administration took was kind of the user-fee route: increasing the contribution by those who can work in order to maintain benefits for those most in need.”

Higher Incomes on Medicaid

Lasee acknowledges the increases may meet with resistance, but as the BadgerCare program has expanded to cover increasingly higher incomes, individuals on Medicaid can now afford to pay something for the services they receive, he says.

“I believe the changes are fair. I’ve had people tell me ‘I’m on BadgerCare, but feel guilty because [I] could afford to pay something for it,’” Lasee said. “If you’re working, you should be contributing toward your insurance, and I’m willing to bet that most of the people who are working and who are on BadgerCare who are now paying more than they did before, they probably all have cell phones, cable, live in nice homes, probably have one or two cars in their family. What’s poor?”

‘Very Reasonable Changes’

Under the national expansion of Medicaid in President Obama’s health care law, as many as 25 million people could be added to the program, Lasee notes, which would now cover those earning up to 138 percent of the federal poverty level—which could lead to a dramatic increase in those covered by programs such as BadgerCare. Lasee says he wishes more Americans felt that part of the pride for them of working was that they could pay their own bills and not be subsidized so much by the government.

“We’re getting more and more Americans who feel their government owes them, even if they’re not [giving] anything back. They get Earned Income Credit, they get BadgerCare, they get other benefits, and they just have a ‘give me’ mentality. It’s unfortunate, and we can’t continue that in the state or country, either,” Lasee said. “That’s what’s driving the changes. And I think they’re very reasonable changes in BadgerCare.

“To get more people who don’t expect things from government and want to pay their own way, we need to get more people who think that way,” Lasee said.

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)