Failure to return to normal is costing taxpayers at least $50 million a year
By Mark Lisheron, Badger Institute, June 27, 2024
After a year-long disenrollment, there are still 163,221 more people on Medicaid in Wisconsin than there were before the start of the pandemic, at a cost to taxpayers of at least $50 million a year.
And so far, the state Department of Health Services isn’t saying how that happened.
More than three years after the federal government directed billions of dollars of federal COVID-19 relief at encouraging Medicaid enrollment and barred states from disenrolling anyone during a health emergency, Medicaid covers 10 million more people nationally than it did in March 2020.
“They call this an unwinding. There is no unwinding here,” state Sen. Rachael Cabral-Guevara, chair of the Senate Committee on Health, said. “There are more people on Medicaid than before all this started.”
Cabral-Guevara, R-Appleton, called for a meeting last week with DHS officials, including Kirsten Johnson, head of the agency, after being kept in the dark about the conclusion of a disenrollment period that started in earnest in May 2023. Other health committee officials in the state Assembly have made the same complaints.
At the meeting, Johnson said DHS created a grace period through September to make sure anyone wrongly disenrolled could reapply or get some other health coverage. Johnson made no attempt to explain how Medicaid enrollment, which had swelled to nearly 1.7 million people at its peak in May 2023, was still up by nearly 14% from the onset of the pandemic.
“It didn’t make sense to sit there and ride DHS when they won’t have final numbers for another 90 days,” Cabral-Guevara said. “But I wouldn’t be surprised if the numbers are even higher then. I don’t think it’s sustainable.”
The Badger Institute contacted DHS and the state Department of Administration multiple times for answers to enrollment questions for this story. Neither agency responded to those contacts.
Much of the media coverage of Medicaid, locally and nationally, has focused on the “unwinding,” a term given to the period after April 1, 2023, when President Biden declared that states were once again allowed to review and drop Medicaid enrollees who were no longer eligible.
Since that time, states have disenrolled more than 23 million people from Medicaid, according to KFF, a health industry research non-profit.
But as the Badger Institute has reported, Biden’s dictate added more than 20 million people to Medicaid rolls before the unwinding at a cost of at least an additional $117 billion.
Wisconsin’s peak enrollment of 1,676,787 in May 2023 was 41.2% higher than at the start of the pandemic, an increase much higher than the national average of 32.6%, according to DHS data. The disenrollment brought that number down to 1,351,059 as of the end of May, 19.4% lower than the peak, but 13.7% higher than the start of the pandemic, according to the data.
Biden’s prohibition on disenrollment increased state spending on Medicaid by $4.5 billion through June 2023, according to the Department of Administration’s most recent financial report.
Federal health officials have added billions more to those costs by dragging out the disenrollment. In March, the U.S. Department of Health and Human Services extended the reapplication process for Medicaid nationwide through Nov. 30.
Another federal policy change allows children to remain covered for a year regardless of their families’ enrollment status. Not surprisingly, the number of children covered by Medicaid in Wisconsin is up by more than 48,000 since January, in the middle of disenrollment, while every other category of coverage continued to fall, according to DHS data.
The end of Biden’s health emergency also means an increase in the burden on state taxpayers for the cost of providing Medicaid. As an incentive to keep people enrolled, the federal government during the pandemic was picking up 65.57% of Wisconsin’s total $27.4 billion biennial cost for Medicaid.
The 2023-25 state budget for Medicaid is $28.3 billion, $14.3 billion for the current fiscal year and $14 billion for the 2025 fiscal year, reflecting the disenrollment. The percentage of federal subsidy has dropped back to a historical level of 60.66%, according to Jon Dyck, an analyst with the Legislative Fiscal Bureau.
For years, fiscal conservatives have worried about the growing costs of Medicaid squeezing out funding for other essential government functions.
According to a report published by the Wisconsin State Controller’s Office, the state’s spending on medical assistance, another term for Medicaid, increased to over $3 billion in fiscal year 2023, or 16.3% of general-purpose revenue expenditures.
The report found that the increase was primarily driven by “continued enrollment growth under the continuous coverage provision of the federal Families First Coronavirus Response Act.”
In comparison, for example, the University of Wisconsin system accounted for only 6.6% of the state expenditures, or $1.25 billion.
At the current federal reimbursement rate, the 163,221 extra Medicaid enrollees are costing $53.1 million a year, $20.8 million paid by state taxpayers and $32.3 million by federal taxpayers, based on the latest average annual cost calculated by the Legislative Fiscal Bureau.
While no one has done a comprehensive study, the amount of support for Medicaid is staggering. Among the panoply of programs is the $175 billion relief fund for health care providers.
At the state level were provisions for Medicaid promotion and enrollment in the $343.6 million umbrella Healthcare Staffing and Facilities programs, and the $100.5 million Healthcare Infrastructure and the $87.6 million Equitable Recovery programs, created by the Evers administration and paid for with COVID bailout money.
Among the initiatives was $6,261,100 earmarked specifically to promote and encourage enrollment in Medicaid and FoodShare or SNAP.
Cabral-Guevara said she has no reason to believe the DHS hasn’t followed the current eligibility rules during its disenrollment process. The higher number, she said, is the success of a campaign launched during the pandemic to promote Medicaid.
“They dumped a crapload of money on this state. There was a political push, media support and new resources for social service people to get people on those programs and to stay on them,” Cabral-Guevara said. “Why are there so many more people enrolled? The requirements didn’t change. There were just a lot more people getting the word out.”
Contrary to the dire warnings about the impact of the disenrollment, researchers at Paragon Health Institute found that nearly 80% of the increase in the so-called Obamacare exchange plans selected nationwide were people disenrolled from Medicaid, Drew Gonshorowski, senior research fellow at Paragon, a nonpartisan research organization, told the Badger Institute.
A recent study published by Health Affairs also dented the notion of low-income people clinging to a Medicaid life raft. A substantial sampling of Medicaid enrollees found that taxpayers footed the bill for as much as 30% of Medicaid enrollees nationwide who didn’t realize they had other coverage.
And because of rules put in place during the administration of Gov. Scott Walker, people earning less than 150% of the federal poverty level in Wisconsin can shift from Medicaid to a wholly taxpayer-subsidized plan on the Affordable Care Act exchange.
“They definitely go hand-in-hand, moving from one fully subsidized program to another,” Gonshorowski said. “Kind of like rearranging deck chairs on the Titanic.”
If, as she suspects, Medicaid enrollments begin to rise again, Cabral-Guevara said there will be added pressure on the Legislature to try to rein in Medicaid costs. The history of that kind of reform in Wisconsin or anywhere else is dismal.
“I’m definitely looking for further explanation when the numbers come in at the end of September,” she said. “Not only is it not going to be pretty, but it’s compounded by our already insane health care costs.
“Please, let’s just not call this an unwinding.”
Mark Lisheron is the Managing Editor of the Badger Institute. Permission to reprint is granted as long as the author and Badger Institute are properly cited.