Examine Fast Growing Medicaid Program

Last summer, John told me BadgerCare saved his wife’s life. John is a dairy farmer and could not afford insurance with dairy prices well below his costs. He thanks God and the state of Wisconsin for a program that brought his wife back home.

BadgerCare is a Wisconsin success story. In the last two years Wisconsin has provided coverage to over 150,000 people who did not have or could not afford health insurance. BadgerCare now covers a total of 700,000 people. More than one in five Wisconsin citizens are helped with health care through Medicaid.

This health care comes at a cost. From nursing home care, services for the disabled and BadgerCare for low income families, taxpayers spent nearly $6 billion last fiscal year for health care.

Medicaid is a program that is growing. Nationwide Medicaid has grown 8% over the past year, the largest increase in the last several years. Wisconsin expenses have grown almost a billion dollars or 20% in just the last year.

As the program grows much faster than state revenue, Medicaid is taking up a larger proportion of the state budget. In 2009, Medicaid accounted nation-wide for an average of 21% of total state spending. One of five dollars in Wisconsin’s budget goes for Medicaid.

People ask me “will Medicaid disappear” with federal health care reform. The answer is ‘no’. In fact the federal government will rely even more on this program to provide health care to needy families and individuals. 

Historically Medicaid has served special populations – low-income children, parents of these children, pregnant women and low-income elderly. Just last summer, the poorest with no dependent children became eligible for the Medicaid program.

The effect of those who are poor and without health care coverage is staggering. In 2007, more than 45% of the poor, non-elderly were uninsured and only 15% had coverage through their job.

Federal health care reform will bring us a Medicaid program with fewer holes in the safety net. A new Health Exchange will be the answer to the self employed and small business person seeking health care. But for the poor, health care reform will be provided nationally through an expansion of the Medicaid program. The Congressional Budget Office estimates nearly one third of those newly insured under health care reform will gain coverage under Medicaid.

One reason is because the federal cost of providing care is less to enroll someone in the Medicaid program than to enroll the person in the new Health Exchange. The Congressional Budget Office estimated the per capita federal cost of covering a patient through the Exchange in 2019 would be $5,926 and covering the same person through Medicaid would be $1,826.

The state cost for an adult under family Medicaid was a little over $2,000 a year. Medicaid has lower administrative costs, contains no profit and pays providers less than commercial insurance.

While the country grapples with adding new people to the Medicaid program, Wisconsin also struggles with strains on the state budget to cover the Medicaid population including the expansion to all children and childless adults.

The Medicaid program in Wisconsin currently faces a deficit of over $600 million. The Legislative Fiscal Bureau recently estimated unanticipated increases in enrollment may cause cost overruns of an additional $120 to $150 million.

Last Wednesday, the Joint Legislative Audit Committee, on my recommendation, considered a comprehensive audit of the state’s Medicaid program. The audit can help us be better informed on how we can most efficiently provide health care to some of our most needy individuals and families.

With federal and state efforts to expand the program and one out of every five budget dollars going to Medicaid, it is critical we make the most informed decisions.  With federal dollars likely to be in short supply in the next budget cycle, an audit can lay out a blueprint for the incoming Governor and the Legislature to craft policies in 2011 that provides care for those with great need at cost taxpayers can afford.