Business Journal: David Riemer: Tackling politics and health care: Health Care Guide - Take 5
January 31, 2013
by Rich Kirchen
The former city of Milwaukee department head is now a senior fellow at the Community Advocates Public Policy Institute in Milwaukee.
Riemer answered questions from The Business Journal on the federal Affordable Care Act and the future of BadgerCare in Wisconsin.
Q: Briefly explain the issue facing Gov. Scott Walker and the state Legislature on filling the BadgerCare eligibility gap.
A: “Gov. Scott Walker and the state Legislature must soon make a fundamental decision about the future of BadgerCare, Wisconsin’s health insurance program for the working poor. They have two simple choices — go through Door A and fill the gaps in BadgerCare eligibility, or enter Door B and allow the gaps in BadgerCare to remain. Each choice will lead to sharply different consequences for the health of Wisconsin’s citizens and the taxes we pay. If (Walker) and the Legislature choose Door A and fill the gaps in BadgerCare eligibility up to 138 percent of the federal poverty level, then an estimated 170,000 low-income citizens will gain access to BadgerCare. The evidence is clear that some, who will otherwise die, will instead survive. Many who will sicken will, instead, get faster, better care.
“On the other side of Door A, the cost to state taxpayers of filling the gaps in BadgerCare eligibility will be quite small. Indeed, taxpayers are likely to save money, because the expansion is 100 percent financed for three years with federal taxes, and subsequent modest increases in state costs will be offset by even greater reductions in existing state spending. This option also means that Wisconsin, which ranks near the bottom of states when it comes to getting a return of our federal taxes, will bring back over $3 billion in federal revenue over the next decade. That recapture of our tax dollars will in turn stimulate our economy and create new jobs.
“Door B will bring about the exact opposite results. Approximately 170,000 citizens of Wisconsin will remain uninsured. Some who might live will die, and many will suffer more prolonged illnesses, because they cannot obtain health care or access it too late. Wisconsin will fail to reclaim over $3 billion of our federal tax payments. And many state employers will pay an additional federal tax, with the total extra tax burden stretching into the tens of millions of dollars.”
Q: How does this relate to the so-called Medicaid expansion under the Affordable Care Act?
A: “In Wisconsin, Medicaid expansion means the same thing as filling the gaps in BadgerCare eligibility. The Affordable Care Act, as interpreted by the U.S. Supreme Court, allows states to expand their Medicaid program up to 138 percent of the federal poverty level. In Wisconsin, the component of Medicaid that would be expanded is the BadgerCare program. Other components of Medicaid, which help low-income persons with disabilities and low-income seniors, would not be expanded. Nor would the main group already covered by BadgerCare — low-income children, their custodial parents, and pregnant women. The legal opportunity to expand Medicaid simply means, in Wisconsin, the ability of our state to cover for the first time the one major group of low-income persons that historically was left out of the BadgerCare program — low-income adults who do not have a disability, are neither children nor seniors, and are not custodial parents or parents at all.”
Q: How do you arrive at your estimate for the tax cost to Wisconsin business if the governor and Legislature do not take the action you are suggesting?
A: “The Affordable Care Act imposes a $3,000 tax for every full-time equivalent employee between 100 percent and 138 percent of the federal poverty level who, if BadgerCare is not available, uses the new health insurance exchange to obtain a subsidy in situations where the employer has 50 or more FTE employees and offers health insurance, but the employee must pay over 9.5 percent of income for employer-sponsored health insurance or is only offered coverage that pays less than 60 percent of health care expenses. In 2008, according to data obtained from the U.S. Census Bureau’s American Community Survey, there were 398,000 Wisconsinites between 100 percent and 138 percent of the federal poverty level. An estimated 83,000 were in the BadgerCare expansion group. If only about half of this group obtain an exchange subsidy because they have employers who offer health coverage that is either too costly or too limited, those employers would pay additional federal taxes that add up to $120 million.
“We cannot know in advance the exact number of individuals who, if Walker and the Legislature fail to fill the gap in BadgerCare eligibility, will cause their employers to pay higher taxes. Nor can we know with precision the amount of the tax increase.”
Q: What amount would the state need to budget to fill the gap?
A: ”Nothing. The full cost of filling the BadgerCare eligibility gap will be reimbursed by the federal government for both years of the next state budget. In fact, 100 percent federal reimbursement will extend beyond the next state budget into 2016. As several studies of the impact of the Affordable Care Act on Wisconsin suggest, filling the gap in BadgerCare eligibility is likely to result in an overall reduction in state spending, not an increase.”
Q: How would filling the BadgerCare gap financially impact private-pay patients and their employers? In other words, how would expanding Medicaid in Wisconsin address the increase in charity care and uninsured care?
A: “Filling the BadgerCare eligibility gap would shrink the amount of charity care, reduce the cost shift to private-pay patients and their employers, and thus lower their medical bills. The uninsured, like all of us, get sick and have accidents. The poorest of the uninsured — the very group meant to be covered by filling the BadgerCare eligibility gap — often show up in hospital emergency rooms in terrible condition. They cannot pay for more than a fraction of their care, so most of it gets shifted to private-pay patients and their employers. But once the BadgerCare eligibility gap is filled, a large segment of low-income adults will have insurance to pay their bills. They won’t need charity care. Even if the insurance doesn’t stop all of the ‘cost shift,’ it will prevent a lot of it. As a result, there will be fewer costs to shift to the majority of us who are private-pay patients and our employers.”
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