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Cost of Turning Down Federal Medicaid Funding Continues to Climb in Wisconsin

Participation of Childless Adults in BadgerCare Far Exceeds Forecasts, While Parent and Child Enrollment Continues to Fall 

The cost to Wisconsin taxpayers of turning down federal funding for expansion of BadgerCare will be substantially higher the next time the Legislative Fiscal Bureau (LFB) makes that calculation.  The potential savings from expanding BadgerCare to 138% of the poverty level and accepting the full federal funding for covering childless adults keeps climbing because the enrollment of those adults continues to grow faster than the Dept. of Health Services (DHS) and the LFB projected.

In an August 14 memo, the LFB estimated that setting the BadgerCare eligibility ceiling for childless adults and parents at 138% of the federal poverty level (FPL) and accepting the enhanced federal funding could have saved Wisconsin taxpayers $206 million during the current biennium, and reversing that choice would save substantially more than that in the next biennial budget. However, those estimates are far too low because childless adult enrollmentcontinues to climb rapidly. Consider the following:

  • The Fiscal Bureau’s calculations in August assumed that the number of childless adults in BadgerCare would gradually climb to 135,000 by next June.
  • The actual enrollment level already reached 129,361 at the end of September, and has climbed by more than 4,500 per month in each of the last two months.

Even assuming the recent rapid pace of growth slows, it now appears that the number of childless adults in BadgerCare will surge well past the 135,000 figure assumed in August and past the revised figure of 145,000 used in September in the DHS budget request.  As childless adult enrollment climbs, so do the potential savings from expanding BadgerCare and taking the increased federal funding (which would finance 100% of spending for childless adult coverage in 2015 and 2016, and 95% in 2017).

Although the enrollment of adults without dependent children is far greater than anticipated, the number of parents and children in BadgerCare continues to fall.  The following are the enrollment changes from September 2013 to September 2014:

  • The number of parents in BadgerCare (including Transitional Medicaid) has dropped by more than 63,000 and the number of children has fallen unexpectedly by more than 10,700.
  • Among families over the poverty level, the number of parents is down by more than 73,400 and the number of children has dropped by more than 25,000.

As I wrote in a WI Budget Project Blog post in early August, the drop in coverage of children is very surprising because the budget bill assumed that the Affordable Care Act would indirectly cause an increase of about 37,000 children in BadgerCare.  One reason for the difference is that DHS had been assuming a significant drop in the number of kids covered by employer-sponsored insurance, and that hasn’t happened.  Even so, the drop in children’s participation in BadgerCare is very disappointing.

I suspect the decline in the number of kids in BadgerCare and Transitional Medicaid is a result of the large drop in the number of parents after their eligibility ceiling was slashed in April.  Although  the children remain eligible up to 300% of FPL, some parents who are now ineligible might not understand that and might not be renewing coverage for their children when they come up for their annual  review.

When Governor Thompson argued in the late 1990s for covering parents in BadgerCare up to 200% of the poverty level, he contended that the best way to get more kids covered was to cover their parents. That proved to be correct, and we are now seeing that the converse is also true:  covering fewer parents significantly reduces coverage of children.  Of course, there may also be other factors, so WCCF reached out to DHS a couple of months ago to get data that could shed light on some of the potential variables. DHS is still working on that data request, and we will share the results with you soon after we get them from the department.

Although the exact cause of the trend in children’s coverage isn’t totally settled, what is very clear is that the surging participation of adults without dependent children means that state taxpayers are paying far more than previously estimated for the decision to reject the enhanced federal funding for Medicaid expansions.

 

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