Medicaid Expansion Would Save State $1 Billion

And cover 83,000 more people, nonpartisan report concludes. Walker still rejects federal funding.

By , Wisconsin Budget Project - Dec 16th, 2015 04:09 pm
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Two state senators released a Legislative Fiscal Bureau (LFB) memo yesterday that provides an updated estimate of the potential savings to Wisconsin from expanding BadgerCare to more adults. The Fiscal Bureau estimates that expanding BadgerCare for adults up to 133% of the federal poverty level would cover an additional 83,000 adults, but would yield a net savings for the state of more than $1 billion over a six-year period – by taking advantage of increased federal funding available for states that expand Medicaid.

If the expansion were to begin on January 1, 2016, the net savings for state taxpayers during the 2015-17 biennial budget period would be $323.5 million. Because that starting date is no longer a realistic option, the paper also lays out the projected fiscal effect of beginning expanded coverage a year later. Under either of those two options, Wisconsin would save an average of more than $15 million per month once the change took effect.The savings estimates are somewhat lower than the LFB’s projections last spring. Several factors have reduced the savings from getting a much higher level of federal funding for childless adults.

  • The number of childless adults in BadgerCare has come down since April, and has been about 10,000 per month below the projection in the budget bill.
  • The state now expects the regular federal match rate to be a bit higher in fiscal year 2016-17 than it anticipated six months ago, which makes the cost of covering childless adults a bit lower.
  • The projected enrollment of parents between 100% and 133% of the poverty level is now a little higher than previously estimated, and since parents (unlike childless adults) are not eligible for the higher match rate, that means a somewhat higher cost for expanding coverage to adults in that income range.

An argument that I sometimes hear against expansion is that it has cost more than expected in states like Ohio. But Wisconsin is in a much different position than those states. We can much more easily estimate the changes in enrollment and the net costs because unlike most of the state that expanded coverage last year, we have already been covering parents and childless adults up to the poverty level. In fact, from 1999 until April of 2014 BadgerCare covered parents up to 200% of the poverty level, which makes it far easier to make the fiscal estimate for partially restoring the coverage of those parents.

Another argument that has made against expansion is that because the full federal funding for childless adults would gradually decline to a 90% match rate, there would be a structural deficit in future years. But as I wrote in a previous article, that’s like turning down the opportunity to refinance your mortgage if you learned that the initial savings of $100 per month would decline over a few years to $90 per month. The LFB memo indicates that even after the federal match rate declines to 90%, Wisconsin would save an estimated $171.6 million per year.

Sooner or later, Wisconsin policymakers will have to face up to the facts that expanding BadgerCare would be a great deal for state taxpayers, while significantly improving coverage for low-income working adults.

8 thoughts on “Medicaid Expansion Would Save State $1 Billion”

  1. AG says:

    So did this report just completely ignore the Obamacare tax credit that individuals get? I’d check myself, but the link in the beginning of the article is broken.

  2. mots says:

    Walker refuses $1B to provide healthcare to our most vulnerable citizens, refuses federal funds to expand internet service to rural areas of Wisconsin, refuses $800M to expand rail infrastructure and mass transportation, and makes massive cuts to K12 and UW education. Walker is a disaster for Wisconsin.

  3. Ben says:

    @mots Don’t forget about the Kenosha Casino he rejected that would have generated over $200 million in tax revenue! I’ve said it before, and I’ll say it again: Scott Walker can’t do math, which is probably why he couldn’t finish college. In addition to the age requirement for running for public office, there should also be some sort of math requirement.

  4. wisconsin conservative digest says:

    Projected 20 years from now and these programs will push out all school spending throwing it on property taxes.

  5. Alene says:

    AG — You are forgetting that the Federal qualification to sign up for the ACA is 133% of poverty. Wisconsin is 100% of poverty. Many of those people who fall into the 100% range are not eligible for the ACA. Due to Walker dropping the percent of poverty to 100% for eligibility, they are no longer eligible for Badgercare either. Walker deliberately created this problem and refuses to fix it.

  6. AG says:

    Alene, the qualification is 100 – 400% of poverty level.

    This exercise does not account for everyone that is receiving tax credits for the ACA exchanges. These people are not left without coverage, they are moved to the private insurance exchanges paid for all or in part by the federal government.

    To only tell half the story is disingenuous and misleading.

  7. wisconsin conservative digest says:

    Does anyone look beyond their pocket today? About 30 years ago, John Shabaz, myself and others projected what was happening with pensions, health and other bennies for public employees that everyone gave out. It showed that our system would collapse from just those items. Well, it did in many places across the country.
    And it is far worse with health expenses. Bruce and some of these big spenders might write about this than instead of whining all the time. Do some research cause Miwlaukee is deep in doodoo that it will nto come out of. Look at Greece, Venezuela, PT, Ilinois, Ca and fins out where those things go.

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