Why GOP Opposes Federal Medicaid Funds

In January, right after taking office, Gov. Tony Evers told Republican legislators at a meeting with them that he would prevail on expanding Medicaid under the federal Affordable Care Act (ACA). “We feel very confident we will win that fight,” Evers told the media.

There were so many reasons to think Evers was right. The sheer amount of money being lost to Wisconsin by refusing the expansion — some $1.1 billion since 2014, according to the non-partisan Legislative Fiscal Bureau — was like a red light blinking the word “sucker” over the state of Wisconsin and its stubborn Republican leaders. 

Voters in the state had apparently figured this out. In January a Marquette Law School poll found that only 25 percent of respondents opposed accepting the money, with 62 percent favoring it and 12 percent saying they don’t know. The positive reaction Evers got from voters on this issue when campaigning told him it was a winner. 

Even in deep-red states like Idaho, Nebraska and Utah, November ballot initiatives were approved to accept the federal ACA funding to expand Medicaid. By now 37 states and the District of Columbia have embraced the expansion.

The map of state hold-outs shows Wisconsin is an anomaly, the only place outside of western and southern states still opposing expansion.  

Add to this the fact that major health-care players in Wisconsin, like the Wisconsin Hospital Association and Wisconsin Medical Society, have urged Republicans to support Evers’ approach. “That’s a lot of money that would have to be unwound from the budget,” said Eric Borgerding, CEO of the Wisconsin Hospital Association, noting the $180 million a year in federal funds that would be lost. “That will make it very, very difficult to do.”

“There’s lots of people out there that work in the health care industry that frankly voted for Gov. Walker that I think can help change that dialogue,” Evers told reporters.

Even before Evers’ bullish predictions, Republican Senate Majority Leader Scott Fitzgerald had declined to rule out accepting the federal expansion money, suggesting he was open to negotiations on this.  

“I honestly think we have to take it,” state Sen. Luther Olsen of Ripon, a moderate Republican, told the Associated Press. “We need to look with an open mind what it does for the state of Wisconsin.”

And yet, once the Republicans who dominate on the all-important Joint Finance Committee began working on Evers budget, they quickly threw out the Medicaid expansion, and looked to reduce spending on schools and other Evers priorities, in order to recoup the lost dollars. 

Why? What possible justification could Republicans have for rejecting the money? 

In the eight years that Gov. Scott Walker dominated Capitol politics, all the attention was on his rationale for rejecting the money. Walker repeatedly insisted he could not accept the funding because the federal government might some day decide to cut off the funding. But at the time 28 percent of the entire state budget was funded with federal dollars. Why wouldn’t you then reject all that money?  

The real reason Walker rejected it was because he intended to run for president and wanted to distinguish himself from other Republicans as the governor most opposed to Obamacare. And even after his 2016 campaign failed, Walker still harbored ambitions to run for president again. 

Interestingly, during all the years Walker cheated Wisconsin of this federal funding, Fitzgerald had little to say. At the very least, he was not a fervant champion of this policy. Assembly Speaker Robin Vos (R-Rochester), by contrast, has always been an adamant opponent of Medicaid expansion.

“Our focus will continue to be reducing people’s reliance on government programs,” he said back in 2013. “We want fewer people on Medicaid.”

Just before the November election, as it began to look as though Evers would defeat Walker, Vos offered this take on expanding Medicaid: “Not going to happen. No way. Never.”

Vos’ rationale for this — that he wants fewer people on Medicaid — ignores the actual plan Walker created. To head off any criticism that he was letting people go without coverage, Walker actually increased the number of people on Medicaid, allowing a new group of 130,000 childless adults into the program, while shifting about 63,000 adults slightly above the poverty line off Medicaid because they now could buy subsidized health plans sold on the marketplaces set up through the Affordable Care Act. 

So Walker was actually expanding the total number of people in Medicaid, but instead of doing it under the auspices of the ACA, he did it under the traditional Medicaid formula whereby the federal government reimbursed 59 percent of the state’s cost, instead of 98 percent, as it did under the ACA. (The figure has gradually declined each year, to 94 percent this fiscal year and 93 percent the following year.) The huge difference in the subsidy explains why the state has lost $1.1 billion since 2014.

Walker’s approach not only required state taxpayers to chip in more, but by shifting the 63,000 people slightly above poverty into the ACA marketplace for subsidized private health insurance, he depended on the federal subsidy built into this program. So Vos’ other claim, that he wants to reduce the amount of government subsidy, is also untrue. 

More recently, Republicans who oppose the Medicaid expansion have cited a study this year by the Wisconsin Institute for Law and Liberty and the Center for Research on the Wisconsin Economy, two groups funded by the conservative Bradley Foundation. Their study, which one economics professor derided as “garbage,” concluded the cost of private insurance increased in all the states that expanded Medicaid, to make up for the government program’s lower average payments for medical care. 

Urban Milwaukee’s Data Wonk columnist Bruce Thompson was far more diplomatic in assessing the study, noting that its comparison of states that did and did not accept the federal Medicaid dollars did not control for the fact that the difference in the cost of private health insurance actually predated the ACA and was due to differences in the economy of the two groups of states. Moreover, Thompson found, the growth in health insurance costs per capita in states that accepted Medicaid expansion actually began to slow down at a greater rate than in states that didn’t accept the federal dollars. In short, the positive impact of the ACA expansion was just the opposite of what the conservative study found.

All of which leaves the question: Why is Vos really opposed to accepting the federal expansion dollars? Vos is a smart guy who surely knows the true details of the plan created by Walker, which punishes state taxpayers in order not to be part of a Democratic-conceived health care plan. 

But for Vos to accept the federal dollars now would be to admit that Republicans had for years refused federal money that would have lowered the burden for taxpayers. That might not hurt Vos in running for reelection in his gerrymandered assembly district, but could hurt him greatly if he runs for governor in 2022 as he seems anxious to do. Better to stick to your stand, and depend on the complexity of the ACA law to allow you to confuse voters on the issue. 

It’s interesting to compare Vos’ adamant stand to that of Fitzgerald. Vos rules an Assembly with a huge Republican majority, which just passed a budget without the Medicaid expansion by 60 to 39. The Republicans’ margin in the Senate is much smaller, meaning Fitzgerald must be more open to negotiating. 

Much of this difference is due to the gerrymandered districts created by Republicans, which have helped them control both houses, but with a far greater margin in the Assembly, given the smaller size of the districts. 

Without gerrymandering, there is no way the Republican legislators could turn down federal money that 62 percent of voters in the state want, and that even many of the nation’s reddest states have gladly grabbed. In the end, the nullifying of democracy accomplished through gerrymandering helps explain so many of the rancid products turned out these days by the GOP sausage makers in the state Capitol. 

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