Coming Soon to a State Near You? Wisconsin seeks to preview a slasher triple feature – Say Ahhh! A Children’s Health Policy Blog

By Jon Peacock, Wisconsin Council on Children and Families

A drama has been slowly unfolding in Wisconsin relating to the shape of the state’s Medicaid program. If it were made into a movie, it would be a slasher film with an unwilling cast of nearly half of the 780,000 people enrolled in Wisconsin’s highly successful BadgerCare program. 

About nine months ago the Legislature handed over the responsibility for writing and directing this horror film to Dennis Smith, the Secretary of Wisconsin’s Department of Health Services (DHS). Smith is known for other work in this genre, particularly when he was the Medicaid Director for the Bush Administration. His previous directing credits include the well known “August 17th Directive,” which restricted states’ options for using federal funding from the Children’s Health Insurance Program (CHIP).

On October 31st, an outline of the new drama’s plot was delivered to Wisconsin legislators. The Halloween documents revealed some worrisome plot twists that could hurt BadgerCare, including:

  • Ending eligibility for many children and parents who have offers of employer coverage, if the premiums would cost less than 9.5% of family income; 
  • Increasing premiums to 5% of income for all families with income above 150% of FPL;
  • Counting the income of unrelated adults living in the household, but not counting those adults in the family size;
  • Ending eligibility for adults age 19 to 26 if they could, in theory, be covered on a parent’s employer sponsored plan; and
  • Creating a new benefit package for families over the poverty level, with reduced services and much higher copays. 

The first four of these changes require CMS to grant Wisconsin a waiver from federal maintenance of effort (MOE) requirements. A Legislative Fiscal Bureau analysis found that approval of the MOE waiver would result in more than 64,000 people losing BadgerCare coverage, including over 29,000 children. If the state is not granted that waiver by the end of 2011, Smith and DHS plan to eliminate coverage for 53,000 parents and childless adults over 133% of FPL, beginning in July 2012. (See WCCF’s comparative summary.) 

CMS announced on December 9 that it will not be able to approve a waiver by the state’s self-imposed December 31st deadline. We are likely to learn early in 2012 whether and to what extent the federal agency is willing to allow some of the proposed changes that require an MOE waiver. 

Approval of a waiver is the most worrisome plotline, but even without one the unfolding drama could be a horrific triple feature. The first installment is likely to be the reduced benefit package and higher copays. That could be followed in the spring by the application of higher premiums and other policy changes to adults over 133% of FPL (and perhaps to some children and lower-income adults if parts of the waiver are approved). A third installment is expected next summer, when the department is likely to end the eligibility of parents and childless adults over 133% of FPL. 
Following its Halloween unveiling, WCCF prepared a critical review of the proposed plotline, focused primarily on the scary effects on children. Fifty Wisconsin groups that share our concerns gave the DHS production “two thumbs down” in a December 1 letter to Secretary Sebelius. 
Despite the critiques by health care advocates, Secretary Smith has a fan base that includes numerous conservative governors and Medicaid directors. If the script he has been developing gets a green light from CMS to preview in Wisconsin, don’t be surprised if it’s playing soon in a venue near you.

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