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Walker’s Lose-Lose Medicaid Decision

Fewer people covered, but higher taxes

Feb. 19, 2013
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“Governor Walker really blew it this time,” state Rep. Jon Richards (D-Milwaukee) said on Monday.

Richards, along with independent health care experts and members of the health care industry, are trying to figure out why Walker would turn down $3.9 billion in federal funding to expand Medicaid coverage for low-wage Wisconsinites.

If Walker was serious about lowering taxes, then refusing the Medicaid funding is the wrong way to go, experts said.

Walker’s rejection of the Affordable Care Act’s Medicaid expansion would cost state taxpayers an additional $250 million through 2020. This additional cost to Wisconsin taxpayers is created because the federal government would not cover 100% of the costs of the new enrollees in BadgerCare because it violates the new Affordable Care Act’s provisions.

State businesses could have to pay an additional $120 million in taxes, according to an analysis by David Riemer at Community Advocates Public Policy Institute.

In addition, Walker’s decision in no way helps him to create the 250,000 jobs he promised to deliver in his first term.

Citizen Action of Wisconsin and Families USA released a study last week showing that a full Medicaid expansion would result in an additional $940 million spent in Wisconsin in 2016, leading to 10,500 new jobs in the state.


‘Shockingly Irresponsible’

Even worse, Walker’s more-expensive option would provide coverage for fewer low-income individuals.

Walker is assuming that these low-income individuals would purchase insurance on the planned health insurance exchange, which will be set up by the federal government, since Walker forbade the state to create one.

But Robert Kraig, executive director of Citizen Action of Wisconsin, said these individuals would likely not buy insurance since it would be too costly. Although the premiums may seem low—perhaps $20 a month for a single person—the additional out-of-pocket costs would make health care prohibitively expensive for someone earning just a little bit more than the federal poverty level, about $11,000 for an individual.

“He’s putting more people into the private insurance market, but at a greater cost,” Kraig said.

Kraig didn’t want to estimate how many people would drop out of the health care system due to cost, since Walker didn’t provide details about his plan and Kraig knew of no other governor who is slicing and dicing the Affordable Care Act’s Medicaid expansion as Walker is.

But Kraig noted that MIT’s Jonathan Gruber, a health care economist, found in 2011 that a full expansion of health care reform would cover an additional 340,000 Wisconsinites—almost 90,000 more than Walker predicts his plan will cover.

“Walker’s decision is shockingly irresponsible from a public policy standpoint,” Kraig said. “It’s entirely a political ploy.”

Those who can’t afford insurance coverage will continue to use health care services. But that means hospitals and other health care providers will either have to eat the costs or pass them along to everyone else, a reason why the Wisconsin Hospital Association doesn’t support Walker’s plans.

Walker’s spokesman did not respond to the Shepherd’s request to provide details about his plan.


Politics At Play

Both Richards and Kraig agreed that Walker’s Medicaid decision was political and not based on a genuine concern about the state’s finances or health care system.

“Walker and his health secretary, Dennis Smith, have always been uncomfortable with BadgerCare,” Richards said. “And they’ve been trying to shed people from BadgerCare for two years now. And this is just another attempt to do that.”

The Walker administration has attempted to limit BadgerCare coverage and increase premiums while refusing to sign up low-wage Wisconsinites who are eligible for the program. The waiting list for BadgerCare Plus Core, for low-income childless adults, stands at more than 130,000 people.

Richards said it was telling that Walker first leaked his plans to a conservative columnist, then unveiled them at a Wisconsin Manufacturers & Commerce fundraiser.

“He announced this at a closed-door lobbyist fundraiser with people who are very well to do,” Richards said. “If this was such a great deal for people dealing with BadgerCare he would have been out there with the people.”

Kraig said Walker’s decision was meant to appeal to the national tea party crowd, which wants to destroy the Affordable Care Act.

“It’s completely designed to create a defensible political position for him, by appearing to the far right as being against Obamacare but he can deny the consequences of that, which is actually causing far fewer people to have access to health care—at greater cost to the state and the federal government,” Kraig said.


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