DHS Highlights Impact of Federal Budget Cuts on Wisconsin Medicaid Members

With the U.S. House of Representatives proposing $880 billion in cuts to the federal budget, substantial impacts to Medicaid and other health programs are unavoidable. The Wisconsin Department of Health Services (DHS) has started to analyze how these cuts might impact Medicaid members and providers in our state, including shifting costs to Wisconsin, slashing the Medicaid budget, making services harder to access for working adults, and increasing costs to Wisconsin taxpayers.

“Wisconsin’s Medicaid program is an essential part of our state’s health care and public health systems and economy,” said Wisconsin Medicaid Director Bill Hanna. “Simply put, we can’t have a healthy and strong Wisconsin without a healthy and strong Medicaid program. Massive cuts like those proposed by Congress would put our people, our health care system, and our economy at risk.”

Medicaid in Wisconsin goes by many names, including BadgerCare Plus, Family Care, IRIS (Include, Respect, I Self-Direct), Katie Beckett, Family Care Partnership, PACE (Program of All-Inclusive Care for the Elderly), and Children’s Long-Term Support (CLTS) Waiver Program. Wisconsin’s Medicaid program provides health insurance benefits to people aged 0-64. Medicaid covers 20% of all Wisconsinites, including 40% of births, 38% of children, and 60% of people in nursing homes. BadgerCare Plus is the state’s largest Medicaid program, with roughly 1 million members, and covers preventive care, urgent and emergency visits, vaccinations, prescriptions, and more.

DHS analyzed three policy proposals and how these cuts to Medicaid might impact the people and providers in our state.

Per-person funding cap

Funding for the Medicaid program is shared between the federal government and states where, currently, the federal government reimburses the state at a set percentage of all eligible Medicaid costs. This arrangement allows state budgets to cope with unforeseen circumstances, such as economic downturns or faster-than-expected increases in medical costs.

Congress may limit federal funding for Medicaid members at a set dollar amount for each enrollee, rather than paying for a percentage of costs. This change would squeeze state budgets and put Wisconsin taxpayers on the hook if medical costs rise quickly, with cuts to benefits and cuts to provider payments. Over ten-year period, Wisconsin would lose up to $16.8 billion in federal funding.

Medicaid infrastructure cuts

The federal government and states also share the administrative costs of running Medicaid programs. This includes functions like determining eligibility for members, staffing to review claims and pay providers, preventing fraud, and investing in information technology systems.

Congress may cut the amount of federal money provided to states to support these vital functions. These changes would make it difficult to fund current and future activities to run Medicaid efficiently and effectively, and to eliminate fraud, waste, and abuse.

More barriers to coverage and increased cost to taxpayers

Many Wisconsinites with Medicaid work in jobs that don’t offer health insurance. Many others can’t work because of a health condition. Congress may impose new red-tape requirements on hard-working Wisconsinites, making it even more difficult for them to get health coverage. DHS assumes that a Congressional requirement to prove that Medicaid members are working would be similar to requirements already in place for able-bodied adults without dependent children in the Supplemental Nutrition Assistance Program (SNAP).

In late 2024, Wisconsin Medicaid enrolled approximately 191,000 adults without dependent children per month. Roughly 52,000 of these members would be at highest risk for losing eligibility. These requirements would also cost up to $6 million annually in administrative costs due to increased paperwork and additional staff time. Wisconsin could also choose to offer employment and training services to Medicaid members to help them meet work requirements, which would be an additional $60 million per year.

These proposals would increase the cost to Wisconsin taxpayers and our health care system. The full report analyzing the impact of these cuts to Wisconsin can be found on the DHS website.

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. While it is believed to be reliable, Urban Milwaukee does not guarantee its accuracy or completeness.