Milwaukee Journal Sentinel: State could save money by not expanding Medicaid program
January 26, 2013
by Guy Boulton
The complexity of the Affordable Care Act could give Gov. Scott Walker a strong incentive to not expand the state's Medicaid program.
Under one scenario, not expanding the program would save the state money immediately and even more money in future years.
But it would leave tens of thousands of people in the state ineligible for coverage. And because of a quirk in the law, it could increase costs for some Wisconsin businesses.
Not expanding the Medicaid program would give the state the option of not covering adults with household incomes above 100% of the federal poverty threshold - $23,050 for a family of four this year. Instead, they would be eligible for federal subsidies to buy commercial health insurance through online marketplaces known as exchanges.
In contrast, only adults with incomes above 138% of the federal poverty level would be eligible for federal subsidies to buy insurance if the state expands its Medicaid program.
The result would be twofold if the state does not expand its program:
The federal government would pay the full cost of providing health insurance to the adults in households with incomes between 100% and 200% of the federal poverty level - $23,050 to $46,100 for a family of four this year - now covered by BadgerCare Plus.
The state now pays about 40% of the cost of coverage.
Adults with incomes between 100% and 138% of the federal poverty threshold who don't qualify for BadgerCare Plus - those who don't have children under 19 - would receive federal subsidies to buy commercial health insurance.
This would mean that anyone with an income above $11,170 - for example, someone who works 30 hours a week in a job that pays $8 an hour - would have access to health insurance, with the federal government paying for most of it.
The scenario would save the state money while expanding coverage for at least some people without health insurance. It also would result in more people having commercial insurance, which pays hospitals much higher rates than Medicaid.
That may explain why the Wisconsin Hospital Association and the health systems that treat adults in the Milwaukee area have not taken a position on whether the state should expand its Medicaid program.
But it also would mean that tens of thousands of people with incomes below the poverty threshold would remain uninsured.
Employers with more than 50 employees that offer health benefits must pay $3,000 for each employee who works 30 hours a week and who gets coverage with the federal subsidies through an exchange. But if the same employee gets coverage through Medicaid, the employer does not have to pay a penalty.
An estimated 83,000 people have incomes between 100% and 138% of the federal poverty threshold and would become eligible for federal subsidies, Riemer said.
The estimate includes illegal immigrants, who are not eligible for coverage under the law.
But if just 20,000 people in that income bracket who were employed bought health insurance with the federal subsidies, Riemer said, Wisconsin employers would pay $60 million in penalties.
That's a cost they wouldn't incur if Walker expands the Medicaid program.
Which option the governor decides on is expected to be in his budget proposal next month.
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