Wednesday, July 24, 2013

Federal Court Allows BadgerCare Core Lawsuit to Proceed

Ruling May Set Important Precedent, but Appears to Be Too Late to Affect BadgerCare

People on the BadgerCare Plus Core waiting list won a preliminary legal victory last week when a federal court allowed their lawsuit against the Wisconsin Department of Health Services (DHS) to proceed. The ruling could be an important precedent, but it’s unlikely to have a direct effect on coverage in Wisconsin because the substantive issues will become moot once BadgerCare eligibility of adults without dependent children is expanded and the current waiver expires, which is likely to be well before the next step in the litigation is resolved.

The crux of the legal dispute is the question of whether a state that gets a Medicaid demonstration waiver has to stick to the terms of that waiver. The decision issued on July 17 by Judge William Conley of the U.S. District Court for the Western District of Wisconsin rejects the DHS argument that the plaintiffs don’t have a right under federal law to get the state to comply with the terms of the BC+ Core waiver.  However, the court has not yet gotten to the more detailed substantive question of whether the waiver’s terms require the state to provide a minimum amount of Core Plan coverage.

The court case was filed on June 1, 2012, after DHS continued to refuse to lift a moratorium on any new enrollment of adults who don’t have dependent children. (Read more here.)  Participation in the Core Plan peaked at more than 65,000 childless adults early in 2010, but by June of this year was less than 18,000 – a 73% decline – while the waiting list grew to more than 150,000.

The plaintiffs have essentially been arguing that although the Core Plan waiver allows the state to cap spending and to restrict participation to about 48,000 childless adults, the state is obligated to serve up to that number (or get federal approval to amend the waiver). Although a DHS legal analysis written at the end of the Doyle Administration supports that interpretation of the waiver, the Walker Administration contends that it is free to serve as few childless adults as it chooses.

The decision last Thursday is a defeat for DHS and a preliminary or partial victory for the plaintiffs (and for Legal Action of Wisconsin, which represents them). But although DHS lost this battle, it will probably prevail in this litigation because the Core Plan waiver expires on December 31, which is likely to be well before the court rules on the more substantive issues involved in this case.

At that point, it appears the debate over childless adult coverage will end with a political compromise, assuming the state is able to get federal approval for the plan approved in the 2013-15 budget bill. The state’s new waiver proposal, which I suspect will be approved by federal officials, would set a lower income limit (100% of the poverty level, instead of 200% now for BadgerCare Core), but would establish an entitlement to full Medicaid coverage for all childless adults below that income level. The Legislative Fiscal Bureau estimates that the number of adults without dependent children participating in BadgerCare will grow to 98,600 by the end of the biennium.

The changes planned next year will be a significant improvement over the current situation, but it’s a shame that it is taking so long to get to the point that we will begin insuring some of the more 150,000 childless adults and noncustodial parents who are on the Core Plan waiting list.  Rather than lapsing CHIPRA bonus funds to the General Fund (using one-time money to increase the size of an ongoing income tax cut that isn't truly paid for), the state could be using that money as a bridge to begin to begin now to insure more childless adults and to avoid the bottleneck of applications that will occur late this fall.

Jon Peacock

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