Walker adjusts plan to close $554 million gap in Medicaid programs

Wisconsin faces deadline to avoid dropping some recipients

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By Jason Stein of the Journal Sentinel

Oct. 31, 2011 |(251) Comments

Madison - Gov. Scott Walker's administration tweaked its proposals Monday to close a half billion-dollar budget hole in the state's health plans for the poor as a deadline approaches for deciding whether the state will drop the health coverage of tens of thousands of state residents.
The state Department of Health Services made the changes in a 238-page plan being sent for review to the Legislature's budget committee, which is expected to take up the proposal next week. But a Democratic lawmaker said Monday he was concerned that there still wouldn't be enough time for lawmakers and President Barack Obama's administration to review the plan - action that is required to keep more than 50,000 state residents from losing their state coverage altogether at the end of the year.
There is a $554 million estimated deficit in state and federal money through June 2013 in state Medicaid health programs, which cover one in five residents and provide everything from doctor's visits for poor families to nursing home care for the elderly.
In closing that gap and controlling fast-growing costs, state Health Services Secretary Dennis Smith has said the state would try to avoid dropping residents with no other options for health insurance. Instead, officials will look at shifting more than 200,000 people covered by state Medicaid into a plan with lower costs for taxpayers but fewer benefits for recipients.
To follow through on its plans, the state will need approval by Dec. 31 from the federal government to waive rules that prohibit those sorts of changes. Otherwise, Wisconsin could be forced to drop 53,000 adults from its health plans under that year-end deadline included in the budget law passed this summer by Republican lawmakers and Walker.
The state can eliminate coverage for adults with incomes above $133% of the federal poverty level - or $24,644 for a family of three - without federal approval.

State confident in review

State Health Services spokeswoman Stephanie Smiley said the agency was confident that federal officials at the Centers for Medicare & Medicaid Services will review the proposal in a timely way to ensure that group of adults is not dropped from coverage.
"We certainly don't think that they would want us to do that either," Smiley said.
But before the changes can be submitted to the federal government, they still have to be reviewed next week by the Legislature's Joint Finance Committee.
A spokeswoman for CMS couldn't be reached for comment late Monday but has said in the past that reviewing such waiver requests can take up to 90 days or in some cases more if the federal agency needs more information.
Rep. Jon Richards (D-Milwaukee) said the state would be giving the federal government less than 60 days to respond to the request.
Richards also pointed to an open records request that he had made that turned up only a quick exchange of three short emails on the request between Smith and a CMS official in October. Richards said he was surprised to not see more evidence that Smith had been talking to federal officials about the state's plan since Smith previously served as director of the federal Center for Medicaid and State Operations at CMS under then-President George W. Bush .
"Were they ever serious about getting this waiver and trying to work this out or was the waiver just a political sideshow?" Richards said.

Proposals on website

Smiley said she couldn't immediately say how much contact there's been with the federal government. But Smith did make federal officials aware of the proposals that the state had posted to its website, she said.
Jon Peacock, research director for the Wisconsin Council on Children and Families, said the federal government "definitely" didn't have enough time to respond to the complex state proposal by the end of the year, saying reviews typically took 90 days.
"One wonders why they waited this long to advance the plan, when clearly they aren't giving federal officials enough time," he said.
One option would be to delay the state's self-imposed Dec. 31 deadline as some Democrats have proposed, Peacock said. That would take a change in state law; Smiley had no immediate comment on the possibility.
In a statement, Smith said Monday that the agency's plans were changed in some respects to reflect testimony given in public forums in Madison and Milwaukee. The changes included:

• The state wants to be able to count all the people living in a residence to determine how much income a Medicaid applicant has and whether he or she qualifies for the program under income limits. The department changed its original proposal slightly to exclude the income of people who live in a household for less than two months.
• The state would provide discounts for higher proposed premiums being charged to certain individuals or families if those families already pay for private health insurance for a different family member.

Medicaid rolls grow

Over the past 20 years, the Medicaid rolls in Wisconsin have increased at nearly 10 times the rate of the state's population, according to state figures. That growth has been driven both by expansions of the program by state and federal officials and by the difficult economy and high unemployment.
Increased federal support from the economic stimulus law and later extensions helped pay those rising costs in the last state budget, but that extra funding has now run out. People who are disabled and elderly - and impoverished - account for much of the program's cost.
In the 2011-'13 state budget, Republicans put an additional $1.2 billion into Medicaid programs to help cover the added costs. But to close a $3 billion deficit for the state's overall two-year budget, the Walker administration said it needed to find these additional proposed savings.
Sen. Alberta Darling (R-River Hills), co-chairwoman of the Joint Finance Committee, said she wants to act quickly on the proposal to give federal officials as much time as possible to review it. She praised the proposal for reining in fast-growing costs.
"It's a major reform initiative because our situation is unsustainable," she said.