Medicaid Costs Are “Unsustainable”

“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