Tuesday, January 10, 2012

Healthcare Highlights of the Holiday Hiatus

Walker Eases His Position on Two Issues, but Reverses His Support for Exchanges

Did you get out of Wisconsin for a week or two in late December or early January? Or perhaps you stayed in town over the holidays, but took a vacation from political news. Even if you only took a brief break from following the news, you may have missed some interesting and important developments on health care policy.

This blog post provides a summary of the significant news relating to healthcare policy over the last few weeks, including developments relating to BadgerCare, Family Care, the Medicaid deficit, and implementation of health care reform.

Medicaid and BadgerCare financing

Medicaid deficit – In a letter to the Joint Finance Committee released last week, the Department of Health Services (DHS) reduced its estimate of the Medicaid budget deficit by almost 60% to $93 million GPR. In a January 3rd blog post, we noted that the $127 million GPR reduction to the projected deficit could be used to avoid the proposed changes to BadgerCare (which would save $116 million GPR, if fully approved by federal officials).  However, the Walker Administration appears to be resistant to using the savings for that purpose.

CHIPRA performance bonus award – On Dec. 28, federal officials announced Wisconsin was being awarded a $24.5 million bonus for the success of BadgerCare in improving Medicaid enrollment of low-income children. As we commented in a WCCF blog post that day, these funds and a similar award that the state can expect at the end of 2012 could help the state avoid the proposed cuts to BadgerCare. The Fiscal Bureau estimates that the state bonus will be about $15 million less in 2012 and 2013 (combined), if the state proceeds with plans that reduce BadgerCare participation by 29,000 children.

Lapse to General Fund – On Dec. 23, the Dept. of Administration released its recommendations for lapsing $123 million from agency budgets to the General Fund during the current fiscal year. The DOA recommendations, which will be reviewed by the Finance Committee, would lapse $18 million from the 2011 CHIPRA bonus award.

Family Care

Elimination of the cap – At a press conference in the Capitol on Dec. 28, surrounded by advocates for people with disabilities, Governor Walker announced that he wants to lift the cap on the Family Care program (imposed by his budget bill) and allow all counties to participate. The Governor said the cost of those changes would be $80 million GPR during the current biennium. It’s unclear how that will be financed, although it will probably be a combination of savings from the reduced Medicaid deficit and changes made to Family Care. Lifting the cap and providing the needed funding will require legislation, but the Assembly co-chair of the Finance Committee has expressed strong reservations. (Read more in the Dec. 28 Journal Sentinel article.)

CMS letter ordering cap to be removed – Later on the 28th, Patrick Marley of the Journal Sentinel tracked down a Dec. 13 letter from the Centers for Medicare and Medicaid Services (CMS) ordering the state to remove the Family Care cap. As Clay Barbour reported in the State Journal a day later, “good publicity turned bad for Gov. Scott Walker on Thursday when details of a letter from the federal government cast doubt on his motivations for lifting the cap on a state safety net for elderly and disabled residents.” See also the short “Fortunes”  column in last Thursday’s Isthmus newspaper.

Proposed BadgerCare policy changes

Dec. 31 deadline – The budget bill says that if the state hasn’t gotten a waiver by Dec. 31, 2011, of the federal maintenance of effort requirements, DHS shall end BadgerCare eligibility of adults over 133% of the federal poverty level (FPL). That deadline has come and gone, and the state still hasn’t received such a waiver. However, in a Dec. 22nd interview with Jason Stein of the Journal Sentinel, Governor Walker said the state doesn’t necessarily have to cut off the 53,000 adults over 133% of FPL. Read more in Sara Eskrich’s recent WCCF blog post.

BadgerCare Petitions – Also on Dec. 22, John Hardin of Chetek delivered to the Governor’s office and DHS nearly 15,000 signatures he collected via an online petition – urging state leaders not to cut BadgerCare.

Senator Vinehout’s bill – On Dec. 27, Senator Kathleen Vinehout introduced a bill, SB 351, that would retroactively change the Dec. 31 deadline to March 1. 

Health care reform implementation

Governor declares a haltJason Stein reported on Dec. 22 that “the state is suspending plans to implement the federal health care overhaul in Wisconsin while the nation's highest court considers whether to uphold that law.” This is a reversal from the Governor’s previous position that a bill to enable a health insurance exchange would be introduced in time for it to be approved before the end of the current legislative session. As the Journal Sentinel reported last week, insurance companies are unhappy with the decision because if the law is not overturned Wisconsin will probably have to have a federally designed and operated exchange, rather than a state-designed exchange.

Federal flexibility on essential benefits – On Dec. 16 the US Dept. of Health and Human Services released a somewhat surprising bulletin that outlines a state-by-state approach to defining essential health benefits (EHB) prescribed by the health care reform law for individual and small group markets, as well as Medicaid benchmark plans. This decision indicated that there will not be a strong federal minimum benefit standard, and instead EHBs will be tied to insurance offerings in each state. 

In conclusion, it’s interesting that the Governor has taken a harder line on health care reform implementation, while easing his positions a bit on BadgerCare (at least with respect to the Dec. 31 deadline) and Family Care. However, the modifications of the Governor’s stance on the latter two issues might have more to do with recognition of the realities of federal law than with a moderation of his position on those issues.

Jon Peacock

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