Republican Gov. Scott Walker’s decision to refuse to fully expand BadgerCare, the state’s Medicaid program, and implement other cost-savings programs under the Affordable Care Act is proving to be a costly strategy for the Wisconsinites who are purchasing private plans on the insurance exchange, as well as state taxpayers.
According to a new study by Citizen Action of Wisconsin, regular Wisconsin consumers who are purchasing insurance on the exchanges are paying $251 more in premiums per year than consumers in states that fully expanded Medicaid under the Affordable Care Act.
The report found that Wisconsin’s insurance policies are more expensive because of Walker’s refusal to accept federal funds. But higher rates are also found in states, like Wisconsin, that review new insurance rates only after they are implemented and have a politically appointed insurance commissioner, instead of an elected one.
Walker appointed a former insurance industry lobbyist, Ted Nickel, to be commissioner of insurance in 2011. His office has never found an insurance rate to be excessive.
In contrast to Wisconsin, states that review and authorize insurance rates before they are implemented see an average savings of $747 on their yearly rates on the insurance exchanges, the study found. And the study found that those with an elected insurance commissioner typically pay $519 a year less on the exchanges than residents of states with an appointed commissioner.
Switching to an elected insurance commissioner would require a constitutional amendment, but Walker himself could bring down the high cost of insurance on the exchanges if he embraced all aspects of Obamacare, argued Citizen Action of Wisconsin’s Robert Kraig on a conference call with reporters last week.
“States are going to benefit or not benefit in the new environment after the Affordable Care Act has become law and is fully implemented to the extent they take advantage of the tools under the law,” Kraig said. “If you take the Medicaid money, it lowers the rates for everyone.”
Kevin Kane, co-author of the Citizen Action report, said when insurance companies released their rates on the exchanges they didn’t know what their competitors were going to charge or how many people would sign up for coverage.
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“Our estimates were that they made this wiggle room for themselves to do this,” Kane said. “That’s why you’re seeing this large premium impact.”
In addition, Jon Peacock, research director at the Wisconsin Council on Children and Families, argued that Wisconsin’s insurance premiums on the exchange were likely higher because the former BadgerCare consumers who are joining the exchanges are typically less healthy and more expensive to insure.
“There’s adverse selection in that group,” Peacock said on the conference call. “They are exempt from the individual mandate because of their income level. They don’t have to sign up. The sicker people in that group do. The healthier people in that group don’t.”
Peacock said that Walker could accept full federal funding to expand Medicaid for those up to 138% of the federal poverty level and use BadgerCare to insure the costly, low-income Wisconsinites and allow healthier consumers with most earnings to use the insurance marketplaces.
Higher Costs for Taxpayers, Too
Walker’s BadgerCare reforms are quite different than what the ACA had encouraged when it offered 100% of the funds to states to expand Medicaid to everyone who lives below 138% of the federal poverty line.
Walker rejected the federal dollars and the full Medicaid expansion. Instead, he kicked Wisconsinites who are just above the federal poverty line off of BadgerCare and added those who are living under the poverty line but were on the waiting list for BadgerCare.
As a result, more impoverished people are on BadgerCare, but people just above the poverty line have been kicked off of it. Walker hopes that they will sign up for private insurance coverage on the insurance exchanges, but experts fear that these very-low-income individuals will go without insurance because of its cost, even if they qualify for taxpayer subsidies.
If Walker had accepted the federal funds to expand Medicaid, the state would have saved money. According to the nonpartisan Legislative Fiscal Bureau, Walker’s plan will cost state taxpayers $119 million more in the first two years of his plan than if he would have accepted the federal money and fewer people will be insured by BadgerCare. Plus, the state chipped in an additional $30 million for hospitals to cover the uncompensated care they would deliver to those who lack insurance—the low-income individuals who had previously been on BadgerCare. Again, if Walker would have accepted the Obamacare plan, the state would not have had to spend this additional $30 million.
And new numbers from the state Department of Health Services (DHS) show that the state has a shortfall of $93 million in its Medicaid fund, far more than its previous estimate of $20 million. The higher costs are due to the rising numbers of childless adults who live below the poverty level and qualify for BadgerCare. If Walker had accepted the federal funds, the state wouldn’t be on the hook for this much money.
Walker’s central argument in favor of his reforms was that low-income people just above the federal poverty line would be able to purchase private insurance plans with taxpayer subsidies on the insurance exchanges.
However, DHS spokeswoman Claire Smith told the Shepherd that the state is currently analyzing data on the numbers of former BadgerCare consumers who have purchased insurance on the exchanges, but that “We will never be able to determine the health care outcome for every individual who transitioned from the BadgerCare Plus program” into the exchanges because these folks could find other insurance options or forgo purchasing insurance altogether.
