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Wisconsin Lawmakers Continue to Resist Medicaid Expansion

July 29, 2019

Lawmakers in Wisconsin are resisting calls to expand Medicaid in the wake of a report by the Wisconsin Office of the Commissioner of Insurance (OCI) claiming expansion would lower premiums in the individual health insurance market by 7 to 11 percent.

To reach that conclusion, the OCI report relied on a September 6, 2016 Assistant Secretary for Planning and Evaluation Issue Brief from the Department of Health & Human Services which stated premiums on the Obamacare exchanges are about 7 percent lower in states that expanded Medicaid compared to those that have not done so yet.

The OCI report, released May 1, estimated 25,000 to 30,000 Wisconsinites with insurance from the Obamacare health insurance exchange would be eligible for Medicaid if it were expanded to include able-bodied adults with incomes of up to 138 percent of the federal poverty level.

Wisconsin has always been on the right side of the Medicaid expansion debate, says Matt Glans, a senior policy analyst at The Heartland Institute, which publishes Health Care News.

“Wisconsin has held strong against Medicaid expansion for years, and state lawmakers should continue to oppose expansion,” said Glans.

Report Failed to Convince

Before the release of the OCI report, Wisconsin Gov. Tony Evers included federal Medicaid expansion in his 2019 budget proposal. On May 9, the Wisconsin Legislature’s budget committee rejected Evers’ proposal to implement Medicaid expansion.

Wisconsin Institute for Law & Liberty Research Director Will Flanders says the OCI report did not tell the entire story of the costs and budget effect Medicaid expansion would have in Wisconsin.

“The OCI study predicted lower premiums for those in the individual market due to the shifting of the lowest-income individuals onto Medicaid,” said Flanders. “These individuals were likely to be in worse health than those on the exchanges at higher income levels.”

Flanders says it is important not to overvalue the report’s conclusions.

“Approximately 57 percent of the people in the state receive insurance through their employer, with only 6 percent receiving it on the individual market.”

Ultimately, the report failed to influence lawmakers, Flanders says.

“Given the miniscule number of Wisconsinites that would be effected by the report’s conclusions, if they were accurate, I don’t think the study had an appreciable impact,” said Flanders. “The more commonsense arguments—drawn from a study we did showing that shifting people who currently have coverage onto Medicaid, which reimburses providers at a lower rate, raises costs for the private payer—held the day.”

Other States’ Expansion Woes

Glans says Medicaid expansion, widely touted as a bargain for states, is costly for both the federal government and state governments.

“While many supporters claim this expansion represents ‘free money’ for the state, Medicaid expansion is anything but free money, and on the contrary, it creates new and expensive costs for states,” said Glans. “There is no clear source of federal funding for Medicaid.”

There are also questions about Medicaid’s health care outcomes, says Glans.

“In 2008, Oregon expanded its Medicaid program by 30,000 people, selected randomly from a waiting list of 90,000,” said Glans. “A 2013 study published in The New England Journal of Medicinefound although Oregon’s Medicaid expansion did create some improvements, such as overall health care use and financial assistance, the expansion failed to achieve the principal goal of health care reform: improving overall health.”

Medicaid expansion may even raise costs for private payers. Glans says a study of Medicaid expansion in Arizona by the Goldwater Institute found that to be the case.

“Prior to Medicaid expansion in Arizona, cost-shifting to private payers to offset underpayments and losses from Medicaid and the uninsured amounted to 14 percent more than the hospitals’ costs, or around $1.4 billion in 2007,” said Glans. “In 2016, three years into expansion, the costs funded by private payers increased to around 27 percent above hospitals costs, or approximately $2.1 billion.”

Everybody’s Already Covered

Flanders says Medicaid expansion is unnecessary for Wisconsin.

“Wisconsin is unique among states that didn’t expand Medicaid in that there is no coverage gap,” said Flanders. “All low-income individuals are either eligible for Medicaid or in a heavily subsidized plan on the ACA exchange.

“Expanding Medicaid here would have only served to shift individuals who are currently eligible for private insurance onto government health care, something our research showed would drive up costs for private payers in the state,” said Flanders.

Nevertheless, Evers told reporters he will “fight like hell” for Medicaid expansion in Wisconsin. He said federal money from expansion will free up state funds for other programs, and his Health Services Secretary designee, Andrea Palm, told Wisconsin Public Radio that Medicaid expansion is the “anchor” of her department’s budget.

 

Kelsey E. Hackem, J.D. (khackem@gmail.comwrites from Washington.

 

Internet Info:

Naomi Lopez Bauman, Angela Erickson, Christina Sandefur, “The Arizona Medicaid Expansion Experience: Beware the Peddlers of Cost-Shifting Claims,” The Goldwater Institute, August 7, 2018: https://www.heartland.org/publications-resources/publications/the-arizona-medicaid-expansion-experience

 

Katherine Baicker et al., “The Oregon Experiment—Effects of Medicaid on Clinical Outcomes,” New England Journal of Medicine, May 2, 2013: https://www.nejm.org/doi/full/10.1056/NEJMsa1212321

Author
Kelsey Hackem writes from Columbus, Ohio.
khackem@gmail.com

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