President’s Column: Obamacare Debate Brings High Stakes for Wisconsin

February 17, 2017

It seems we may soon see action on the ACA, and nowhere will debate be more contentious or high stakes as in Medicaid where two huge issues are in play—funding for states and spending limits. They are intertwined, must be considered together, and in the end cannot penalize states like Wisconsin that did indeed expand Medicaid, though not as prescribed by Washington. 

First, creating spending caps in Medicaid does not diminish the need for this safety net program, nor does it lessen the need for care in our hospitals, emergency rooms and clinics. Demand for Medicaid is driven by social and economic factors that are often beyond the control of an individual, a state or a health system. And there are components of Medicaid, including coverage for the elderly and disabled, that will continue to be expensive and that in an inflexibly capped expenditure environment will crowd out other in-need populations. These dynamics could be particularly troubling in states like Wisconsin that did not adopt ACA-defined Medicaid “expansion” and must be factored into whatever comes next.

Giving states more program flexibility, as is being floated under all the Medicaid proposals, holds promise if exercised prudently and done within a Medicaid program that remains a responsive safety net. But giving states greater flexibility is not a substitute for more equitable funding.

Which brings me to the second, and in some ways even more critical and primary issue—establishing the base level of federal Medicaid funding for each state going forward. This must be done in a manner that treats all states fairly. If not, those that either rejected ACA Medicaid expansion or, like Wisconsin, expanded coverage their own way and with their own money will be harshly penalized under new funding formulas. Sounds strange that in this anti-Obamacare environment a state that actually rejected one of its most heavy-handed federal dictates could indeed be punished for doing so, but it’s true. 

Here’s why - the Obama Administration defined “expansion” as making people with incomes up to 138 percent of the federal poverty level (FPL) eligible for Medicaid, regardless of how many people a state might actually add to Medicaid. In other words, expand their way and the Feds would cover up to 90 percent of the cost of doing so…expand a different way, no enhanced funding. This “policy lever” has worked for 31 states, but for 19 it has not, including Wisconsin. Congress and the President should now redefine Medicaid “expansion,” including recognizing how it has been and, as importantly, how it can be achieved. 

Here’s why they must - after rigorous debate, Wisconsin rejected Obamacare-defined “expansion” but instead added 130,000 people below 100 percent FPL, those “in poverty,” to Medicaid. But according to Washington, this was not “expansion,” and thus not eligible for enhanced federal funding. It is a consummate example of Washington’s “our way or the highway” mentality that has created a state patchwork of Medicaid haves and have nots that is proving one of the biggest snags in the repeal and replace debate.

Our rough estimate puts the added cost to Wisconsin for not “expanding” Medicaid the Washington way, (despite adding 130,000 impoverished people to our Medicaid program) at about $280 million per year. In other words, 31 states receive nearly 100 percent federal funding for the exact same population that Wisconsin now spends over a quarter-billion dollars per year to cover. Since 2014 we have been essentially penalized upwards of one billion dollars while expanding coverage to 130,000 of our most vulnerable, impoverished citizens. This could also mean Wisconsin will receive fewer federal Medicaid dollars under new funding formulas and spending caps now being considered in the Obamacare replacement. 

This is more than a math exercise. These are dollars that could be used to expand our diminishing health care workforce, train more primary care doctors, improve access in underserved rural and urban areas, boost reimbursement and reduce Medicaid cost shifting to employers and families … right here in Wisconsin. 

Compounding all this, under the ACA Wisconsin hospitals are taking an estimated $2.6 billion in Medicare payment cuts over 10 years. A portion of those Wisconsin cuts are used to pay for Medicaid “expansion” as defined by the ACA, which means none of those dollars are coming back to Wisconsin. 

WHA believes any Medicaid restructuring should continue the federal-state partnership that ensures access to high-quality health care coverage, provide sufficient funding, and treat expansion and non-expansion states in an equitable manner. All states should be fairly and equally funded for what they have done to cover those in need. 

For Wisconsin, this is an issue that should transcend the partisanship of the ACA/Obamacare debate. It is about fundamental fairness that our state and federal elected official should coalesce around and demand. We were pleased to see a recent letter from Joint Finance Committee Co-Chairs Sen. Darling and Rep. Nygren urging our Congressional delegation to fight for the Badger State. Governor Walker has been very visible and vocal among the nation’s Governors in calling for fair treatment of states like Wisconsin. But more voices need to be heard. 

When it comes to Medicaid, the ACA picks winners and losers based on an arbitrary multiple of the federal poverty level, not on how many people are actually covered. That is unfair to Wisconsin, especially when one remembers that the goal here is to expand and sustain, not penalize, coverage. It is a fixable flaw that both sides of the Wisconsin political aisle can and should work together to remedy. 

Eric Borgerding

This story originally appeared in the February 17, 2017 edition of WHA Newsletter