Friday, October 14, 2011

Overview of Consequences of Wisconsin DHS Proposal to cut $554 million from Medicaid

On Friday, September 30, 2011, DHS released plans to help cut $554 million from Medicaid. Key aspects of the proposal require
federal approval through a waiver from the Centers for Medicare & Medicaid Services (CMS). This is a preliminary assessment of the
likely consequences of the proposed changes relating to BadgerCare Plus, with regard to the “maintenance of effort” waiver portion of
the DHS proposals and the benchmark plan. Overview and analysis of the other proposals will be forthcoming.



Increases BadgerCare
premiums up to 5% of
household incomes

 Increases out-of-pocket costs for Wisconsin families, making health care coverage

The proposal would increase premiums to 5% of income for many families above 150% of the
federal poverty level and would expand the premiums to children’s coverage (which would affect
child-only coverage for some of the nearly 44,000 enrolled children between 150% and 200% of
the poverty level). For low-income families who are often living paycheck to paycheck, higher
premiums will frequently mean loss of coverage and becoming uninsured. A single mother with
two children making just under $28,000 per year currently pays about $10 a month in premiums
but under the benchmark plan proposal would pay up to $116 a month.

Denies BadgerCare to
individuals who are offered
high cost employer-
sponsored insurance that is
deemed affordable by
lowered DHS standards

Makes it harder for workers to afford and access the health care they and their families need.

Many low-wage workers may be offered employer-sponsored insurance, but it’s often
unaffordable. DHS proposes denying BadgerCare to workers who are offered employer
insurance, even if they can’t afford it. This will result in individuals and families becoming
uninsured due to financial barriers. The proposal by DHS deems employer coverage “affordable”
if it costs less than 9.5% of household income, whether it covers only the employee or the entire
family. For example, a family of 5 that currently pays $54 a month in BadgerCare premiums
could instead pay $330 for an employer-sponsored insurance plan premium – an increase of
$3,312 per year.

Requires young adults from
the ages of 19 through 26
to be covered under their
parents’ health insurance

Kicks young adults ages 19-26 off BadgerCare Plus.

The Affordable Care Act ensures that young adults have the option of staying on their parent’s
insurance until they are 26. This plan mandates coverage under parent’s insurance by making
young adult ineligible for BadgerCare Plus. It presumes all young adults have parents who are
willing and able to add them to their private insurance, and that the adult child lives in the same
area as their parent.

Eliminates presumptive

Delays care for eligible children and/or pregnant women when they need it most.

By making it harder for women to enroll in BadgerCare through presumptive eligibility, women
will be delayed from getting cost-effective prenatal care early in their pregnancy and interrupt
the continuity of care that gives babies a better chance at a healthy start.

Drastically increases
penalty time for individual
who misses a BadgerCare
premium payment

Doubles amount of time individuals and families are suspended from health care coverage
through BadgerCare.

In light of premium increases, there will likely be more missed premium payment due to higher
costs. This will result in many people being kicked off BadgerCare for a year, including many
children (who now aren’t generally suspended, because premiums don’t apply to them).

Forces all individuals above
100% FPL into a more
expensive Benchmark plan

Shifts over 200,000 beneficiaries into a higher cost-sharing and lower benefit plan.

Proposals call for moving all families and individuals above the poverty level into an “alternate
Benchmark plan”, which would cost more and cover less – though we still don’t know the details.
The reduced scope of covered services is likely to preclude some of the most vulnerable
beneficiaries from getting the health care they need. Cost-sharing from co-pays and deductibles
would be increased, up to a cap of 5% of household income, and that is apparently on top of
increased premiums (also up to 5% of income) for families above 150% of the poverty level.

Ends retroactive eligibility

Increases amount of uncompensated care and increases likelihood of health care bankruptcy.

This would end the current practice of covering eligible individuals for up to three months before
applying. For some with very expensive hospitalizations, these costs may bankrupt the person.

Changes the definition of
the family unit

Counts the income of all adults living in the household in determining eligibility (except

Counts the income of other adults living in the household (e.g., siblings, roommates, boyfriends
or girlfriends), but appears not to count them on the expense side of the ledger. This is likely to
put many BadgerCare enrollees over the income limits, and raise premiums for many others.



Assumes individuals no
longer eligible for
BadgerCare can afford
private health care

Creates higher health care costs with cost-shifting.

With people losing BadgerCare coverage, and thus joining the ranks of the uninsured, this will
result in cost shifting that will make health care more expensive for every Wisconsin family and
small businesses. That loss of coverage among low-income households is also likely to lead to
unfavorable outcomes for providers, who might face increased use of emergency rooms, a loss of
revenue due to more uncompensated care, increased use of emergency rooms, and “adverse
selection” (as cost increases, participation by healthier individuals decreases, which increases the
average costs for those who continue their coverage).

Puts pressure on federal
leaders to approve the
waiver to change Medicaid

Drops 47,000 parents and 6,000 childless-adults from BadgerCare, if waiver not approved by
federal government.

The state budget requires DHS to obtain a “maintenance of effort” waiver from the federal
government by 12/31/11. If the waiver is not approved, the budget forces DHS to drop
BadgerCare coverage for 53,000 parents and childless-adults, making these Wisconsinites
uninsured. For example, parents in a family of three or four, both working minimum wage jobs
would be disqualified from BadgerCare.

3 Things You Can Do Today to Save BadgerCare!

1. Stay informed & Stay Connected!
a. Visit and sign up to join the coalition
b. Visit & connect with us on Facebook

2. Demand Opportunity for Public Input on Changes to BadgerCare
a. Call or email DHS Secretary Smith and ask that he schedule public hearings on
his proposed Medicaid Changes – (608) 266-1865 /
b. Call or email Chairs of the State Health Committees and ask that they schedule
hearings on the DHS proposed Medicaid changes – Senator Vukmir: (608) 266-
2512 / and Representative Jeff Stone: (608)
266-8590 /
c. Call your own state representatives and ask them to hold briefings in your
district – Legislative Hotline - 1-800-362-9472

3. Stand Up – Speak Out & Weigh In
a. Share why BadgerCare is important to you through the DHS online survey. Visit and click on the
“Provide Input” link on the left side of the page.
b. Participate in our Save BadgerCare Photo Petition. Simply email pictures
to of you holding signs that show why saving
BadgerCare is important to you.

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