Obamacare Replacements Continue to Shortchange Wisconsin

Wisconsin estimated to come up $37 billion short compared to expansion states

July 14, 2017

The Senate Republicans’ newest proposal to replace Obamacare, released July 13, again falls far short of ensuring access to affordable care, stabilize the insurance markets, and protect Wisconsin’s Medicaid program, according to the Wisconsin Hospital Association (WHA).

The most recent version of the U.S. Senate’s Better Care Reconciliation Act (BCRA) keeps the same tax credit structure as the previous draft, which was first unveiled June 21. Under the Senate plan, tax credits would increase for older Americans and would be eliminated for those making 350-400 percent of the federal poverty level (FPL). The plan also phases out the cost sharing subsidies that have helped reduce out-of-pocket costs for many at the lowest income levels.

And the newest version of the bill makes few changes to how Medicaid would be funded, thus maintaining the disparities between expansion and non-expansion states. An analysis by the Missouri Hospital Association and five other hospital associations including WHA, estimates that, under the BCRA, the 19 states that opted out of the Affordable Care Act’s full expansion for Medicaid, including Wisconsin, will have foregone $737 billion over 10 years compared to the 31 states that expanded Medicaid under the ACA. Wisconsin’s share of that is estimated to be at least $37 billion over 10 years.

"The BCRA continues to perpetuate the funding inequities between expansion and nonexpansion states," according to WHA President/CEO Eric Borgerding. "It is absolutely unacceptable that the bills being proposed to replace Obamacare are financially punishing states that rejected Obamacare."

In a letter to the Wisconsin Congressional Delegation July 13, Borgerding noted both the House and Senate bills recognize the need for the Medicaid Disproportionate Share Hospital (DSH) program. But, he added, as drafted, the provisions would have no substantive impact in Wisconsin. As such, both bills fail to alleviate the significant funding disparity between Wisconsin and expansion states.

Under the federal DSH program, each state has a cap on its federal DSH funding. The BCRA would allow for non-expansion states to have a higher cap or "allotment." It takes state dollars at the regular Medicaid matching rate to draw down those federal DSH funds.

"Increasing Wisconsin’s DSH allotment alone is meaningless since Wisconsin would have to spend an additional $59 million in state dollars each year just to draw down the allotment we currently have," said Borgerding. "A real solution would instead be to allow a higher match rate for nonexpansion states for DSH funding or recognize Wisconsin’s partial expansion population."

Wisconsin’s "Partial" Medicaid Expansion, a $280 Million Annual Cost to State Budget
Gov. Scott Walker expanded Medicaid by adding 130,000 people below the poverty level to the program. But Wisconsin’s version of expansion didn’t meet the Obama administration’s definition of "expansion." That means Wisconsin spends $280 million per year to cover the exact same population that, under the ACA and now the American Health Care Act/BCRA, an expansion state would spend 1/10 of, roughly $28 million, to cover.

"That’s a difference of nearly a quarter-billion dollars annually we could use to train more primary care doctors and nurses, improve access in underserved rural and urban areas or reduce Medicaid cost shifting to employers and families—right here in Wisconsin," Borgerding said.

Additionally, under the ACA, Wisconsin hospitals are taking billions of dollars in Medicare cuts to pay for coverage expansion, including for Medicaid in those states that are getting more federal dollars for full expansion. Under the BCRA, those cuts continue, and Wisconsin keeps paying, according to Borgerding.

"The unique Wisconsin model of coverage has worked to reduce our uninsured rate by an estimated 38 percent, and we can be proud to say that everyone in poverty is covered under Medicaid," said Borgerding. "Unfortunately, funding disparities baked into the BCRA would place our state at a significant disadvantage."

WHA continues to urge Wisconsin’s two U.S. Senators, Ron Johnson and Tammy Baldwin, to fight for Wisconsin and ensure Medicaid funding equity under any proposals acted upon by the Senate.

This story originally appeared in the July 14, 2017 edition of WHA Newsletter