While Hospitals Elsewhere Back Medicaid Expansion, Wisconsin Hospitals Offer a Fallback Plan

Hospitals in Wisconsin and many parts of the U.S. are asking state policymakers to take measures to reduce the amount of uncompensated care, although the recommended measures aren’t always quite the same. In our state, the Wisconsin Hospital Association (WHA) is asking state lawmakers to renew an expiring appropriation that provides state financial relief to hospitals that care for a disproportionate share of the uninsured or underinsured.

The $30 million state appropriation, which expires in June, captures $44 million in federal funds for “disproportionate share hospitals” (DSH). Wisconsin Health News reported last week that WHA plans to ask state policymakers to renew the appropriation. Extending that funding makes sense if state lawmakers continue to refuse to expand BadgerCare to cover more low-income adults, but the expansion option could save the state close to $300 million in the next budget and do far more to improve access to insurance and help hospitals.

Health care providers in a number of other states are taking a different approach. Many hospitals are very concerned now about uncompensated care, particularly those in rural areas of states that haven’t used funding from the Accordable Care Act to expand Medicaid to more low-income adults. An article in this morning’s New York Times reports on a proposed Medicaid expansion plan that has been developed by the GOP Governor in Tennessee, with the urging of the state’s hospitals, and Medicaid expansion is a very high priority for hospitals in many other states.

The political dynamics and substance of the debate are somewhat different in Wisconsin— thanks in part to the fact that Governor Walker and the legislature have partially improved coverage. They expanded BadgerCare to include all childless adults below the poverty level, although they helped finance that by cutting in half the BadgerCare income limit for parents – from 200% of the poverty level to 100%. During budget deliberations, the legislature improved that plan by adding the DSH funding, but that is a short-term appropriation.

When the Governor pitched his plan to lawmakers in 2013, he contended that more than 90% of the adults losing BadgerCare coverage would move into Marketplace plans or other private insurance. However, the early analyses of the available data show that only about a third of the people who lost BadgerCare eligibility this year (because of the reduced income limit) signed up for Marketplace plans. The data show that some have other private plans, but 46% were uninsured or had unknown insurance status.

The Hospital Association is understandably concerned about losing the $74 million of state and federal funding to help offset the cost of uncompensated care, especially at a time that the Governor’s compromise on BadgerCare appears to have caused many parents to become uninsured. (Dept. of Health Services’ figures on the allocation of the DSH funding to WI hospitals in fiscal year 2015 can be found here, courtesy of Wisconsin Health News.)

Even if Wisconsin did accept the federal funding to expand BadgerCare, I think providing some DSH funding might make sense. As WHA Executive Vice President Eric Borgerding told WI Health News, “Wisconsin had one of the smallest DSH programs in the country already, and it will disappear completely if not reauthorized.” Nevertheless, the DSH approach is clearly the second best option because it would provide less relief to hospitals, would give far fewer people access to preventive care, and would be far more costly for state taxpayers.

From wisconsinbudgetproject.org.