Medicaid cuts could come down the road
By Kevin O’Brien, Tribune Phonograph
Thousands of Wisconsinites could potentially lose their health insurance, if Congress follows through with plans to cut Medicaid spending and impose new work requirements on participants, according to Wisconsin Medicaid director Bill Hanna.
“It’s not like these people just disappear,” he said, April 28. “They still need care. Now, they just won’t have the insurance, meaning hospitals again will be picking up additional costs, which gets passed on to all health consumers.”
According to the Department of Health Services (DHS), they believe “substantial impacts” to Medicaid and other health programs would be “unavoidable,” under a budget blueprint published by the House of Representatives, calling for $880 million in cuts to federal spending in the next budget.
A 10-page report released by the DHS, outlines how federal spending cuts would impact Wisconsin’s Medicaid programs in three ways: capping the amount of money that can be spent, per person; “imposing new red-tape requirements on hard-working Wisconsinites”; and reducing the amount of money spent on administrative functions, such as fraud prevention.
The biggest financial impact to the state, would come from the proposal to no longer pay Medicaid expenses on a percentage basis, but on a per person cap. With Wisconsin currently reimbursed for about 60 percent of all medical expenses incurred by Medicaid patients, the state could lose as much as $16.8 billion over the next 10 years, if that formula was scrapped.
When asked why the DHS’s projections for Wisconsin were so much higher, than those put out by the non-profit Kaiser Family Foundation, Hanna acknowledged that there are “a lot of unknowns” at this point, so the agency’s report included a range of scenarios, with a low-end estimate of $6.4 billion in lost revenue, if costs rise at a slow rate.
Hanna said state lawmakers have four basic options to choose from when responding to Medicaid cuts: finding more money in the budget to offset reductions in federal spending; changing eligibility requirements so that fewer people qualify for Medicaid; covering fewer medical services; and cutting reimbursement rates to healthcare providers.
No matter which option legislators choose, Hanna feels federal cuts will have an impact on both patients and providers, whether that’s hospitals or municipal ambulance services that rely on Medicaid reimbursements, for a sizable portion of their revenue.
At this point, Hanna shared that Gov. Tony Evers is concentrating on getting his budget proposals passed, so his administration has not devoted much time to talking with legislators about how to handle potential Medicaid cuts.
“We’re all trying to read the tea leaves about what will or won’t happen at the federal level,” said Hanna. “I think, until there is more certainty, the focus is on getting the current state budget approved by this summer.”
The question also arises, how much improper payments contribute to the waste, fraud and abuse that Republicans are trying to eliminate.
“Improper payments are not fraud, waste and abuse,” said Hanna. “Improper payments are often a documentation error, that can be a number of reasons.”
In the most recent audit report on the state’s track record of verifying Medicaid eligibility, the improper payment rate was just .05 percent – or three clerical errors.
“We have a very robust system, with very few errors,” said Hanna.
Fraud prevention might actually become more difficult, if Congress reduces the amount of money it pays to help administer Medicaid, which includes everything from reviewing claims to vetting applications. The reimbursement rate for determining eligibility is currently at 75 percent and the federal government covers as much as 90 percent of any new technology needed to assist in the eligibility process.
“If, all of the sudden, all of those admin dollars dropped to 50 percent, that’s a significant loss of funding to focus on those eligibility operations and those IT systems that protect the integrity of our program,” said Hanna.
Wisconsin has traditionally prioritized coverage for children – one-third of whom rely on Medicaid or the Children’s Health Insurance Program (CHIP) – so Hanna believes the people most at risk of losing coverage are adults, who are either physically unable to work or would not be able to complete the additional eligibility requirements proposed by Congress.
The DHS report says that 52,000 Wisconsinites are “highly likely to lose their health coverage,” if additional barriers are put in place for enrolling in Medicaid.
“Eligibility is not an easy process, certainly in Wisconsin,” said Hanna. “There’s lot of proof you have to send in. Adding an additional burden to this population will certainly result in fewer making people making it through.”
When asked for a comment about the DHS report and Hanna’s statements, Congressman Tom Tiffany (R-7th District) cited a 2023 advisory referendum, in which 80 percent of Wisconsin voters supported work requirements for able-bodied, childless adults.
“I will preserve Medicaid for the most vulnerable – the disabled, pregnant women, single mothers and low-income children,” said Tiffany. “To protect the program, we must implement reforms to root out fraud, enforce work requirements for able-bodied, working-aged, childless adults and ensure benefits do not go to illegal aliens. Wisconsin voters overwhelmingly support these measures, and with over half a trillion dollars in improper Medicaid payments over the past decade, they are just common sense. Republicans are committed to safeguarding Medicaid, so it remains a lifeline for those who need it.”
Tiffany also cited a study by the Economic Policy Innovation Center, indicating that $567 billion in improper payments – either to the wrong person in the incorrect amount – were paid out by Medicaid nationwide, over a 10-year period.
“Improper payments, by definition, are improper and shouldn’t be happening,” said Tiffany. “Isn’t it a good thing, to make sure these payments are cleaned up?”
