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Wednesday, Nov. 30, 2011

Gov. Walker's Plan Would Kick 29,000 Kids Off of BadgerCare

More hurtful to children than the Legislature's radical plan

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When Dennis Smith, Gov. Scott Walker's secretary of the state Department of Health Services (DHS), conducted a public outreach tour to explain how he wanted to cut $467 million from Medicaid programs, he didn't mention how many kids from low-income families would lose their health care coverage.

Instead, Smith focused on "fairness," and asked that low-income families pay their "fair share" for their BadgerCare coverage.

Smith didn't mention that 29,000 children—plus 34,000 adults—would likely lose their BadgerCare coverage if his "reforms" are implemented. Another 104,000 adults would be required to pay more toward their Medicaid coverage.

Smith is asking the federal government for a waiver to implement his reform of Medicaid programs, something the Republican-led Legislature authorized him to do since it failed to fully fund the program in the state budget. If Smith doesn't receive the federal waiver by Dec. 31, the Legislature will allow him to drop more than 53,000 adult BadgerCare recipients from the program in July 2012.

Although Smith's plan would reduce state spending by $90 million, it would also mean losing more than $135 million in federal funding for Medicaid, since the federal government pays about 60% of the Medicaid costs. In contrast, kicking 53,000 individuals from the program next year would result in a $60 million reduction in state spending and a loss of $90 million in federal money.

Forcing Struggling Families to Pay More for Coverage

So how is Smith forcing so many kids off of BadgerCare?

According to Jon Peacock, research director for the Wisconsin Council on Children and Families (WCCF), kids will lose their coverage because Walker and Smith believe that families who are just above the poverty level should pay more for their health care coverage. Peacock did a thorough analysis of the savings assumptions DHS supplied to the Legislative Fiscal Bureau, which synthesized DHS's numbers and released them to the public.

  • Smith plans to limit BadgerCare eligibility to those folks who do not have access to "affordable" health care through their employer. "Affordable," in Smith's view, is almost 10% of an already low income. Smith's plan requires families with an income of 133% above the poverty line—$24,645 for a family of three or $29,726 for a family of four—to purchase their employer's health care coverage, if offered, and if the premium is less than 9.5% of the family's income, or about $2,400 to $2,900 for a family of three or four. DHS's own estimates show that 11,274 children and 16,588 parents would lose BadgerCare coverage and pay much more for their health care coverage.

WCCF's Peacock warned that Smith is only considering the cost of the private insurance premiums, and not the additional cost of out-of-pocket expenses such as co-pays and deductibles, which are uncapped.

"That's way, way out of reach of these families," Peacock said.

  • Smith's plan would also force families who still qualify for BadgerCare to pay more for their coverage. Currently, premiums aren't required for children who are living at 200% below the poverty level—$37,060 for a family of three, for example. Smith is shifting that downward, so families that make more than 150% of the poverty level will now have to pay premiums for kids in BadgerCare.
  • Smith is also raising BadgerCare premiums to 5% of income for all families above 150% of the poverty level. DHS estimates that about 12,000 kids and 6,000 adults would drop their BadgerCare coverage because this one change would make the program unaffordable.
  • Smith also plans to lock children out of BadgerCare for 12 months if their parent misses a premium payment. This is a radical departure from the current practice, which suspends adults from the program, and only for six months. DHS failed to estimate how many children would lose their coverage because of this change, Peacock said.
  • Smith is changing the definition of family income to make a household seem wealthier than it is. If Smith's changes are approved, the total income of adults who are living together for more than 60 days will be counted as family income. But Smith is not taking into consideration the adults' expenses. This makes the household seem wealthier than it truly is and would disqualify more children and adults from the BadgerCare program.

Smith had decried the current practice as a "marriage penalty" that overlooks the income of unrelated but cohabitating adults. But WCCF's Peacock argued that Smith is now penalizing adults who live together.

"[Smith's plan] doesn't adjust the family size for higher expenses," Peacock said. "It's extremely inequitable."

Peacock also warned that this could affect adult roommates who are on BadgerCare, since an individual's income would appear to be higher with the addition of his or her roommate's income.

Taken together, Peacock said that many families would choose to drop their health insurance coverage, since they either wouldn't qualify for BadgerCare or they wouldn't be able to pay for supposedly affordable policies—BadgerCare or a private insurance plan. Since these newly uninsured low-income people will still get sick and need health care, the cost of these uncompensated health care services will be shifted to individuals, employers, health care providers and local governments who currently pay for health care services.

"I would acknowledge that we need to find ways to reduce health care spending in general, including Medicaid and Medicare spending, if we find ways to truly bring down the cost of the health care system," Peacock said. "But when you simply transfer the cost somewhere else and in the process don't capture the federal [funding] match, then you're hurting the state economy."

A spokesman for DHS could not be reached for comment.

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