Thursday, August 2, 2012

Using the ACA to Fill the Gap in BadgerCare: Who Would Be Served and What Is It Likely to Cost?

Funding in the Affordable Care Act (ACA) gives Wisconsin an exciting opportunity to close a very large gap in BadgerCare – coverage for low-income adults who aren’t custodial parents of minor children. To help facilitate an informed discussion of that issue, we prepared an outline of relevant data and analyses relating to who would gain coverage and the net fiscal costs and benefits for Wisconsin.

We hope this document will be a starting point for efforts to identify and analyze the best available information relating to all the costs and benefits of using the ACA to close the gap in BadgerCare coverage. We would welcome your input as we refine the outline and hone in on a clearer understanding of the Wisconsin implications of this very important part of the ACA.

Based on an Urban Institute analysis last year, as well as recent fiscal estimates conducted in Arkansas and Maryland and our own review of Wisconsin data, we think that using the ACA option to close the BadgerCare gap is likely to produce a net fiscal gain for the Wisconsin budget. At this point we cannot forecast that with certainty, but the following factors make us conclude that the “expansion” (gap closing) would probably have a positive fiscal effect in Wisconsin:
  • The ACA provides a substantially higher federal Medicaid match rate for covering adults without custodial children than the rate the state now gets. 
  • There would be a reduction in uncompensated care costs (which would save money for the state, as well as for hospitals and their patients). 
  • The state will be able to reduce spending for adults over 138% of the poverty level (by moving them into Exchanges or by using the ACA’s Basic Health Plan option). 
  • The infusion of federal funds into the state will have a positive effect on state tax revenue.
The outline examines those factors in more detail and reviews some of the relevant data that is still fuzzy and some of the policy variables that still need to be pinned down (including the enhanced federal match rate for the portion of Wisconsin’s childless adult population already served by the BadgerCare Core Plan). Those uncertainties make it difficult to nail down a firm estimate of the net cost or gain at this time; but it’s not too soon to begin working to ensure that state policy makers and the public have access to the best available information.

Our outline is an attempt to enhance transparency and public involvement in the deliberations on this health care reform issue. As we get feedback on the outline and clarification on some of the unsettled policy questions, we will continue to update and improve upon this document.

Jon Peacock

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