Obamacare Could Get Sweeter for Wisconsin

The budget bill introduced this week by President Obama would make the expansion of Medicaid an even better deal for states like Wisconsin that have not yet taken up the option. If Wisconsin expanded BadgerCare eligibility in January 2017, the president’s recommendations would increase the savings for Wisconsin taxpayers by $252 million by the end of fiscal year 2021.

The president’s proposal calls for reimbursing each state for the full cost of newly-eligible adults for the first three years after expanding coverage, regardless of when the expansion begins. As a result, states that expand coverage of adults this year or any time in the future would get the same enhanced federal funding as the states that expanded coverage in 2014.

A Wisconsin Legislative Fiscal Bureau (LFB) memo released in December estimated that a Medicaid expansion to 138 percent of the poverty level, beginning in January 2017, would save Wisconsin taxpayers about $834 million by the end of the 2020-21 fiscal year, while covering about 83,000 more adults.

Using all of the same assumptions about enrollment and costs that the LFB used in their memo, but adjusting the federal cost-sharing, we calculated that the president’s proposal would boost the savings during that time period to almost $1.1 billion. That would bring the savings to about $187 for every Wisconsinite, which is an increase of 30 percent compared to the current law.

The change recommended by the president is likely to face opposition from Congressional opponents of the Affordable Care Act, so its passage is far from certain. But even if it isn’t enacted, the long list of reasons for expanding BadgerCare is getting stronger. For example, two studies published in January in Health Affairs found that poor adults in expansion states have significantly greater access to health care services and fewer problems paying their medical bills. Additionally, hospitals in expansion states are admitting fewer uninsured patients. (Read more in this CBPP blog post.)

With so many benefits, it’s not surprising that the number of states that have expanded Medicaid eligibility continues to grow. Louisiana is scheduled to begin its expansion in July, making it the 31st expansion state. And Medicaid expansions are under consideration this year in a number of other states, including Alabama, South Dakota, and Wyoming.

For the moment, Wisconsin’s 2015-17 budget is in balance and state legislators are unlikely to approve a BadgerCare expansion, despite its huge cost savings. But Republican leaders are already talking about the probability of an extremely challenging budget next year, and that means BadgerCare expansion will be back on the table when state policymakers work on the 2017-19 biennial budget.

As the empirical evidence for expansion grows and the fiscal arguments keep getting stronger, it’s only a matter of time before lawmakers in Wisconsin and other non-expansion states reconsider their opposition to expanding access to Medicaid. At that point, they can help state taxpayers, health care providers and low-income working adults by expanding eligibility and capturing the state’s share of the federal funding for Medicaid expansions.

By Jon Peacock and Sashi Gregory