Monday, October 21, 2013

Is There an Affordable Care Act Coverage Gap in Wisconsin?

Wisconsin's Unique Medicaid Solution Necessitates that Diverse Parties Work Together

Over the last couple of months, there have been numerous reports about a large hole in the Affordable Care Act – stemming from the Supreme Court’s decision to make it optional for states to expand Medicaid coverage to all citizens below 138% of the poverty level.  Some of the reports and media stories have incorrectly suggested that Wisconsin was among the states where the ACA will leave a gap for people below the poverty level. A new report from the Kaiser Family Foundation (KFF) rebuts that misconception.

It’s important to examine this issue closely – to clear up the confusion about the gap in coverage and to clarify that this significant problem for other states was not one of the concerns being raised by groups like WCCF that were advocating for Wisconsin to expand Medicaid and accept the increased federal funding.  Even more importantly, the Wisconsin approach to the Medicaid issue highlights why we need to work together to make the Health Insurance Marketplace successful in our state.

The KFF report explains the scope of the problem in the 26 states that, as of late September, did not plan to implement the Medicaid expansion:
In states that do not expand Medicaid, over five million poor uninsured adults have incomes above Medicaid eligibility levels but below poverty and may fall into a “coverage gap” of earning too much to qualify for Medicaid but not enough to qualify for Marketplace premium tax credits. Most of these people have very limited coverage options and are likely to remain uninsured.
Although Wisconsin is one of the 26 states that have chosen not to provide Medicaid coverage to all citizens up to 138% of the poverty level, and that are not taking advantage of the enhanced federal funding for that expansion, our state is different than the others on that list. The KFF report indicates that Wisconsin is the only state among the 26 that will be covering all adult citizens up to the poverty level.

Wisconsin was starting from a very different position than the other 25 states on the “non-expansion” list because BadgerCare was already covering roughly 90,000 parents between 100% and 200% of the federal poverty level, as well as about 5,000 childless adults in that income range. However, the BadgerCare Core program for childless adults has a waiting list of well over 150,000 people and it was not a full Medicaid benefit. The decision in the budget bill to provide full BadgerCare coverage to all childless adults below the poverty level is expected to add 80,000 people to BadgerCare, but it is being financed by ending BadgerCare eligibility for an even larger number of adults currently in the program.

The decision to cap eligibility of parents and childless adults at the poverty level is justified on the basis that those adults can get subsidized coverage in the Health Insurance Marketplace. That’s true – at least in theory – as we show in this WCCF infographic illustrating the coverage options in 2014 for Wisconsinites who don’t have access to affordable employer-sponsored coverage.

In short, by embracing a key part of ObamaCare – the new Marketplace – Governor Walker was able to turn down the Medicaid expansion funding, while still being able to reduce the number of uninsured Wisconsinites. It’s not a terrible plan, although I think there was a far better alternative. State lawmakers could have covered far more people at much less cost to state taxpayers by expanding BadgerCare to all adults up to 138% of the poverty level and accepting the enhanced Medicaid funding (saving nearly $150 million of state funding during the 2013-15 biennium).

A significant problem with the budget plan is that many of the low-income adults who are over the poverty level will end up uninsured because they won’t be able to pay the premiums and other cost-sharing for Marketplace coverage. The federal cost-sharing structure for coverage through the Marketplace wasn’t intended to serve that population. In addition, many adults in that income range don’t have checking accounts or credit cards and will have great difficulty simply with the logistics of paying premiums and co-payments.

I’ll probably elaborate on those concerns at a later date, but the much more important thing is to look forward and focus on the issues that join us, rather than the ones where we have disagreed. Because the Governor has embraced the Marketplace as a way to reduce BadgerCare eligibility for some, and thereby finance expanded and improved coverage for childless adults, Wisconsin is in a very different place than the other states that have been resisting implementation of the Affordable Care Act.

In our state, unlike many others, advocates, health care providers, employers and politicians have many reasons to roll up our sleeves and do whatever we can to make the Marketplace successful – not only for tens of thousands of Wisconsinites who are now uninsured, but also for about 90,000 people who will be losing their BadgerCare coverage in January, and about 25,000 even more vulnerable people losing coverage in the state high risk plan.

A DHS press release today reiterates that the Governor’s plan is expected to reduce “the number of uninsured adults by an estimated 224,580, cutting the uninsured rate nearly in half.”  I think that will be a stretch because it assumes that more than 90% of the adults losing BadgerCare coverage will be insured in the Marketplace. Yet regardless of whether we think that specific goal is realistic, I think we need to join forces in trying to maximize that percentage and the effectiveness of the ACA in reducing the number of uninsured Wisconsinites.

Jon Peacock

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