BadgerCare recipients brace for health insurance exchanges
Madison — When a potentially fatal intestinal problem forced Bethany King into surgery in 2011, the state's BadgerCare Plus coverage paidalmost all of the hefty bill.
But next year, the small business owner's income may rise just enough to bump her from the Medicaid program into the federal insurance marketplace being created under President Barack Obama's health-care law, which King worries may further strain an already tight budget.
"It is all the unknowns that bug me more than anything else," said King. "I have had so much different information and basically everybody doesn't know."
In less than three months, these federal insurance exchanges will start signing up customers, and tens of thousands of low-income BadgerCare recipients such as King, 31, will find out how they fare in this complex and still poorly understood system.
There may be a bright spot. While the private coverage offered through exchanges will likely cost more than BadgerCare, it may not cost as much as some advocates feared.
The question is key in Wisconsin, which is proceeding differently than other states. Neighbors such as Illinois and Minnesota have expanded Medicaid coverage to insure those making just over poverty level wages. Here, about 90,000 people will be moved from BadgerCare coverage to the federal system.
"It's a huge change," said Bob Peterson, executive director of ABC for Health, a public interest law firm. "For the hospitals, for the clinics, for the people seeking care, it turns a lot of things around for them."
He said the exchanges' first few months will be a "white knuckle" adjustment.
Those just over the federal poverty level, $19,530 a year for a family of three, will face a complex choice about whether to purchase insurance to replace their Medicaid coverage.
BadgerCare offers low co-pays to those enrolled in its most subsidized coverage and charges premiums only for a select group of adults making somewhat higher incomes.
Under the federal health care law, Wisconsin could have used federal money to expand Medicaid for those between 100% and 138% of the poverty level and in the process boosted the state budget.
But Gov. Scott Walker and GOP lawmakers chose to put these consumers in the private federal exchanges, saying they were concerned the federal money wouldn't be available over the long term.
Walker spokeswoman Jocelyn Webster pointed out that the governor's plan will actually bring a large group of childless adults onto BadgerCare for the first time.
"Everyone in Wisconsin will have access to affordable health care," Webster said. "Governor Walker's plan will reduce the number of uninsured adults by about 224,580, cutting the uninsured rate by nearly half."
Living on a tight budget
King runs a home remodeling business, Madison Residential, with her husband. She said she will purchase insurance. Her second surgery last year cost at least $126,000, with all but about $100 covered by BadgerCare. Needing to keep her income steady as she cares for her two young daughters, she felt compelled to go back to work a little over a week after her first procedure in May 2011.
"My clients all looked at me and were incredibly worried," she said. "It sucks, but whatever, you get over it."
For now, it's still unclear how current BadgerCare recipients will fare in the exchanges.
Sara Eskrich, a health policy expert at the Wisconsin Council on Children and Families, said her group tries to keep talks on the exchanges "as broad as possible, to stay safe," highlighting the federal program's premiums and potential for higher out-of-pocket expenses.
Eskrich said the state's decision not to expand Medicaid, however, was bad for low-income residents.
"When you are making $11,000 per year, and the majority of that is going to pay rent, every dollar counts," Eskrich said.
Walker's plan, according to DHS, will bring more than 80,000 childless adults living in poverty into BadgerCare, a slightly smaller group than those with higher incomes being forced to leave the exchanges under Obamacare.
"The governor believes that having more people depend on government-run Medicaid should not be our goal. Rather, we want to help individuals and families living above poverty to remain in the private sector for getting their health insurance coverage," agency spokeswoman Claire Smith said.
What to expect
Under the standard BadgerCare plan for adults with children, extremely low co-pays — and not premiums or deductibles — are charged. Prescription costs run between $0.50 and $3, and inpatient hospital care is $3 a day up to a $75 maximum.
A different plan for childless adults has slightly higher prices.
The comparable costs for the exchanges still aren't fully known.
Except for some people on the cheapest plan, coverage will require paying a premium as low as 2% of income. The cheapest plan without a premium, however, has far higher out-of-pocket expenses compared with the coverage specifically aimed at low-income individuals. Co-pays must still be set. Out-of-pocket maximums for those just over the poverty line will be around $2,000 for individuals and $4,000 for families.
The exchange will offer four main tiers of insurance that vary in price and quality. A special category also will be available for those between 100% and 150% of the poverty limit, where the insurer must on average pay 94% of health care costs with the average patient picking up the remainder up to a limit.
In 2011, the Kaiser Family Foundation asked three insurance providers to come up with the basics of a plan that would fit such a model in 2014.
The charges varied widely. The cheapest offer included no deductible and 8% coinsurance (the share of expenses paid by the consumer). The most expensive had a $200 deductible and asked for 10% coinsurance.
Preventive care under the federal health legislation is fully covered.
California has released some prices for its own state exchange, which specifies what individuals will pay for specific kinds of services. That state's estimates use the 94% value and ask individual consumers to pay $4 to $10 for drugs and 10% of a physician or surgeon's fees for a hospital stay.
These numbers, however, will likely be somewhat different in a federal exchange like the one coming to Wisconsin. But they do provide at least a glimpse into what's coming.
Rebecca Nelson, a 39-year-old single mother of four living in Eau Claire, also worries about getting removed from BadgerCare and facing cost increases.
She has struggled with severe back and other medical problems — she moves slowly, has trouble walking and can't sit in the same place for more than a half-hour without pain.
On June 5, her landlord knocked on her door and apologized as he handed her a five-day notice saying she must either pay her eight months in back rent or face eviction.
"(My 15-year-old son) went to his room. He started packing his stuff. He knew I didn't have the money," Nelson said.
On medical leave now and living under the poverty line, Nelson said she will likely earn enough to fall just over the line if she is able to return to work next year and therefore be forced onto the exchange market.
Democrats have criticized Walker's decision to turn down the increased federal Medicaid funding, which the nonpartisan Legislature Fiscal Bureau has estimated would save the state about $340 million through 2021.
The Walker administration has responded that its plan doesn't rely on uncertain federal funds and that 93% of those with incomes between 100% and 138% of the poverty limit will sign up for coverage under the federal exchange. The fiscal bureau has said the assumption of a 93% sign-up rate is "unreasonably optimistic."
As for Nelson, she borrowed money from a friend and avoided eviction. But in her case, the federal coverage may end up costing too much.
"It is still more than I would be able to afford," she said.