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Can State Lawmakers Count on Federal Funds for Highways and Health Insurance Subsidies?

Today’s Circuit Court Ruling Reinforces the Inconsistencies in State Lawmakers’ Reasoning

Photo of a car driving along a Wisconsin highway, under two exit signs

Can Wisconsin afford its road construction projects?

Should state lawmakers turn down federal funds whenever there’s a risk that the funding in question could be cut in future years? If so, why is Wisconsin proceeding with major highway and bridge construction plans at a time when Congress is using short-term gimmicks to keep the Highway Trust Fund from becoming insolvent? And why did Wisconsin cut BadgerCare eligibility in half for parents, based on reliance on federal funding to subsidize the federal health insurance Marketplace?

That last question has gotten little attention over the past year, but it will be raised more often following a ruling today by a subset of the DC Circuit Court of Appeals. Two of the three judges participating in that ruling concluded that federal subsidies for the health insurance Marketplace can only go to people in states that set up their own Marketplaces. If that ruling is upheld, it would be a huge problem for Wisconsin – considering that 90% of the Wisconsinites who have purchased plans from the federal Marketplace are receiving federal subsidies, and those subsidies cover 74% of the cost of Marketplace premiums.  (Read more about the DC Circuit Court’s ruling in this NY Times article.)

The stakes are even higher in Wisconsin than in most of the other 35 states relying on the federal Marketplace, because Wisconsin lawmakers decided in the budget bill to cut in half the BadgerCare income ceiling for parents. About 70,000 fewer parents over the poverty level are now enrolled in BadgerCare (compared to December 2013), and it was assumed by state policymakers that most of those adults would move into subsidized Marketplace plans.

Over the past year, we have heard prominent Wisconsin policymakers express concerns about taking federal funding to expand BadgerCare because a future Congress might renege on the commitment to provide the increased Medicaid funding. Ironically, those policymakers pushed through an alternative plan that costs state taxpayers more, covers fewer people in BadgerCare, and relies on federal Marketplace subsidies that might be at greater risk than Medicaid funding.

It’s important to note that a different federal court ruling today upheld the Marketplace subsidies, and that federal assistance isn’t going to be suspended in Wisconsin any time soon. Although I think it’s unlikely that federal courts will uphold today’s ruling by the DC Circuit Court, it isn’t the only source of risk for Marketplace subsidies; many of the same conservative lawmakers who oppose continuation of the increased Medicaid funding have also supported repealing the ACA and Marketplace subsidies.

The arguments for turning down federal Medicaid funding because its future isn’t completely certain seem inconsistent and a bit disingenuous, considering that state lawmakers approved BadgerCare changes that rely on another funding stream in the Affordable Care Act and are also are happily taking federal highway funding.

By Jon Peacock

Photo by Doug Kerr released under a Creative Commons Share Alike license.

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