Steven Walters
The State of Politics

Medicaid Costs Are “Unsustainable”

Costs on pace to rise 102% in six years, GOP wants cuts, but not before election.

By - Jun 13th, 2016 12:44 pm
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“Unsustainable.”

That’s the word state government officials most often use to describe the soaring cost of Wisconsin’s Medicaid program, which will provide health care for 1.13 million poor, elderly and disabled individuals this year. One in five Wisconsin residents are helped by Medicaid.

Why “unsustainable”? Two sets of numbers paint a grim picture:

Between state budget years 2011 and 2017 – Republican Gov. Scott Walker’s tenure – general-fund tax collections are expected to increase by 21.2 percent. Over that same period, general-fund tax dollars budgeted to pay for Medicaid are projected to more than double, rising by 102 percent – from $1.44 billion in 2011 to $2.91 billion in 2017.

For the first time, Medicaid is budgeted to cost more than $9 billion in the year ending June 30, according to the non-partisan Legislative Fiscal Bureau. The federal government pays about 58 percent of Medicaid costs.

Medicaid’s one-year spending increase – from $8.52 billion last year to a budgeted $9.22 billion this year – will be 8 percent. That’s twice the hoped-for 4 percent annual increase in general-fund tax collections.

Fears that Medicaid costs will further squeeze spending on other critical state programs – aid to schools and local governments, the University of Wisconsin System, technical colleges and prisons – prompted the governor in 2015 to suggest reworking how Medicaid delivers programs to about 55,600 recipients.

The changes would have affected those helped by the Family Care and would include Respect I Self-Direct (IRIS) programs, which funds some of the most expensive – and most needy – Medicaid recipients.

According to a Fiscal Bureau summary, Family Care helps about 42,400 “qualifying low-income individuals who are elderly, physically disabled, or developmentally disabled.”

An alternative to Family Care, IRIS, gives about 13,100 individuals monthly budgets to self-direct their long-term care services. IRIS participants can choose their own workers, such as family, friends and neighbors, to help, if they are properly trained and pass background checks. Individuals enrolled in Family Care also have the opportunity to self-direct many of the long-term care services they receive.

Family Care and IRIS programs exist in all but eight Wisconsin counties and are expected to cost $1.83 billion this year – or 20 percent of all Medicaid spending.

But, after Walker’s administration suggested reworking how Family Care/IRIS programs are delivered, budget-writing legislators were surrounded by those using the program, their family members and care givers. In emotional public appeals, they all said: “DON’T change Family Care/IRIS.”

Responding, legislators last year told the state Department of Health Services (DHS) to draft a proposal that would rework Family Care/IRIS. DHS submitted a proposal that divides the state into regions and would allow “integrated health agencies” – health insurers authorized to do business in Wisconsin licensed as HMOs – to administer and provide that care.

Why did DHS insist that changes are necessary? “It is essential that changes are made now to ensure Wisconsin’s long-term care programs will continue to be cost-effective, sustainable and available for years to come,” DHS officials warn.

Translation: Medicaid costs are “unsustainable.”

But legislators last year also told DHS it could not ask the federal government to review the proposed changes without permission from the Joint Finance Committee (JFC), made up of 12 Republicans and four Democrats.

The committee’s six Assembly Republicans were interested in giving DHS permission to take the plan to the federal government. Retiring Rep. Dean Knudson, in a WisconsinEye interview, said the changes would be phased in and are reasonable and desperately needed.

But some of the six Senate Republicans – four of whom are up for re-election in November – feared having Family Care/IRIS participants, their family members and care givers repeating the same emotional arguments at campaign events for the next five months.

There’s another reason why JFC wouldn’t deal with the plan to change Family Care/IRIS: It may not save much money. DHS estimates total six-year savings with the changes at $301 million, including $126.4 million in state tax dollars. The savings would come from slowing growth in primary and acute-care services.

Many officials – including veteran lobbyist Tom Frazier, cochair of the Wisconsin Long-Term Care Coalition – oppose any changes.

“We do not believe that the numbers add up, especially given the disruption in the lives of over 55,000 frail elders and persons with disabilities,” Frazier says. “Also, we believe that an equal or greater amount of savings can be obtained by expanding existing programs.”

All this led DHS officials to formally kill the changes to Family Care/IRIS on Friday. But state officials still use the same word – “unsustainable’ – to describe Medicaid’s fiscal future. Meaning there may be a future move to make changes — but not until after the November election.

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com

5 thoughts on “The State of Politics: Medicaid Costs Are “Unsustainable””

  1. Tim says:

    What type of hack could write this article and not mention the ‘Affordable Care Act’ aka “ObamaCare” ? So, today’s set of false choices is to cut healthcare funding for the poorest among us or risk “Unsustainable.” run ups in cost?

    What about accepting the hundreds of millions of dollars that the feds are offering to cover these very people?

    Ignorance of this magnitude is no accident.

  2. Jason says:

    I do not understand why elderly people or disabled Wisconsinites are on Medicaid or Badgercare. My understanding is Medicare, which they are eligible for is more of a value for them and Medicare is funded by the Federal government.

  3. Tom D says:

    Poor people are often on BOTH Medicare AND Medicaid. Medicare only pays about 80% of costs while Medicaid usually pays 100%. When you are on both, Medicare pays the first 80% and Medicaid pays the reset; Medicaid also covers the monthly Medicare premiums.

    Also, the most expensive part of Medicaid is nursing home care (which Medicare doesn’t cover at all). Nursing homes are outrageously expensive (my mother-in-law paid over $16,000 a month in NYC!) and most people in nursing homes can’t afford it on their own. Medicaid kicks in and pays 100% if you have no assets to speak of (the big exception is that you can keep your home, but Medicaid might even go after that after you and your spouse die).

  4. Daniel Golden says:

    Tim is spot on. How could one report on this problem without including some mention of Governor Walker’s decision, embraced by almost all the Republican legislators, to refuse Medicaid expansion. Steven Walters, how about an addendum to your article to address how much further ahead Wisconsin taxpayers would be ahead right now if the dogma driven, economically ignorant Governor we now suffer under, had not refused to accept Federal dollars. It is also a moral failing of the Wisconsin media, ( I exclude from the actual media propagandists like Charlie Sykes, Mark Belling, and Vicki Mckenna who actually praised this stupidity) that they never called Walker on his lame excuse that he was not sure that the federal government would honor their commitments in the future. This is the same federal government he is asking to rescue wealthy property honors whose homes are in danger of shoreline erosion .

  5. Mal says:

    Incredible.

    Walters writes like a bad Walker PR hack. Policy by talking point.

    See Scott Walker: Denying Health Care To Low-Income People Helps Them ‘Live The American Dream’ and Scott Walker’s sabotage of health care reform in Wisconsin for a dose of reality.

    Readers should note Walters works for Corporate Shills for Scott Walker. See Wisconsin Eye. Vis: Vis:

    WisconsinEye Board of Directors

    Margeret Farrow, Chair
    Former Lieutenant Governor

    Diane Hendricks
    Chairman – ABC Supply

    Taylor Mathy
    Mathy Construction

    Mark Meyer
    Meyer Consulting, LLC

    Jim Riordan
    Former CEO – WPS Health Insurance

    David Sanks
    Former Executive Vice President – Television Wisconsin
    Chairman – Wisconsin Broadcasters Association Foundation

    Brandon Scholz
    Partner – The Capitol Group

    Bob Vanden Burgt
    Principal – Yahara Software and Principal/Vice President Marketing – Link USA

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