Over the next week, the Wisconsin Budget Project will be highlighting a different piece each day from our larger publication Breaking with Tradition: How Wisconsin Lawmakers Have Shortchanged a Legacy of Investment in the State’s Future. You can access the full report on our website.

BADGERCARE

In the last four years, state lawmakers have made substantial changes to the BadgerCare program, which provides health care coverage to low-income individuals and families. The most dramatic change, which took effect in April 2014, was to cut the income eligibility limit for adults in half, to the federal poverty level (FPL), or $19,790 for a single parent with two children.

The cut in eligibility yields savings that offset part of the cost of extending coverage to at least 100,000 childless adults below the poverty level, many of whom had been on a BadgerCare waiting list. But the cut – which knocked more than 60,000 parents off BadgerCare – could have been avoided if the state had accepted federal funding that would finance the cost of covering newly eligible adults with incomes up to 138% of the federal poverty level ($27,130 for a family of three).

A decline in the number of parents enrolled in BadgerCare and Transitional Medical Assistance (TMA) began earlier, after the 2011-13 budget bill granted the Department of Health Services (DHS) sweeping authority to make cost-cutting changes, even if those changes conflict with state law or administrative rules. In July 2012, DHS used that power to make a number of changes affecting adults, including raising BadgerCare premiums and expanding them to more parents. Although most adults above 100% of FPL lost their BadgerCare eligibility in April 2014, Transitional Medicaid serves a dwindling number (14,753 in June 2014) of parents above that income level.

Despite the sharp drop in enrollment of parents in BadgerCare, the net result of the state policy changes and indirect effects of the federal Affordable Care Act (ACA) has been an increase in total BadgerCare enrollment. And because about a third of the parents who lost BadgerCare coverage were able to purchase subsidized insurance plans through the health insurance Marketplace, there should be a decrease in the number of uninsured Wisconsinites. Nevertheless, the decision to reject the federal funding and only partially expand childless adult coverage has many drawbacks, including:

Accepting the full federal funding and covering adults up to 138% FPL would yield BadgerCare coverage for about 85,000 more adults than the Governor’s plan, yet was projected to save state taxpayers $119 million during the current biennial budget period.

Since Marketplace coverage is significantly more expensive for low-income adults than BadgerCare, the restrictions on eligibility will be a financial hardship for thousands of families, and many of the affected adults are likely to go uninsured; and

Because the enrollment of childless adults has exceeded expectations, the state Department of Health Services projects a much larger shortfall in Medicaid funding, and more than $200 million in cuts to state and federal Medicaid spending will be necessary if lawmakers continue to refuse the federal funds for Medicaid expansion.

DHS tried to use the authority it was granted in the 2011-13 budget bill to make changes that it estimated would cause at least 29,000 children to lose their BadgerCare coverage; however, the Obama Administration rejected those changes because they conflict with “maintenance of effort” provisions of the federal health care law that require states to protect coverage of kids until 2019. Nevertheless, the 2013-15 budget bill codified the BadgerCare changes for kids, enabling those measures to go into effect once the maintenance of effort requirements no longer protect children’s coverage.

Although most of the proposals that would directly affect BadgerCare for children have been delayed by federal law, the changes that are affecting parents seem to be indirectly reducing kid’s coverage.   Over the first six months of 2014, the number of children over the poverty level who are enrolled in BadgerCare has dropped by more than 24,000 – a decrease of 13.6%.

On a more positive note, state lawmakers passed a number of worthwhile measures relating to mental health care during the 2013-14 session. For example, the 2013-15 budget bill appropriated $29 million in new state funds for mental health programs and created an Office of Children’s Mental Health to improve the integration of mental health services provided to children and monitor performance.

You can access the rest of the report here.