Wisconsin: Scott Walker suddenly LOVES Obamacare so much he's willing to save it...by taking $34M from Medicaid.
Back in January, I noted that Wisconsin GOP Governor Scott Walker, who has followed the party line on the ACA since it was first signed into law, has suddenly found religion:
It looks to me like after his short-lived 2016 Presidential campaign (seriously,it only lasted 70 days...heck, even Lincoln Chafee's campaign lasted twice as long), Wisconsin Governor Scott Walker decidedto go back to shoring up his image in his home state...and since Wisconsin is one of 14 states which doesn't have any term limits for the top spot, it looks like he'sscrambling to move back to the center policy-wisejust in time to run for a third term this November:
After years of fighting Obamacare, Gov. Scott Walker is now seeking to stabilize the state marketplace under the law.
Wisconsin plans to permission to cover expensive medical claims for health insurers on the marketplace, which should lower premium increases and could bring back companies that dropped out, the governor said in an interview with reporters on Friday ahead of his election-year State of the State address Wednesday.
The state will also ask to permanently continue SeniorCare, a prescription drug program Walker has previously sought to pare down, he said.
Walker also said he’ll ask the state Senate to pass a bill authored by Democratic lawmakers and passed by the Assembly that would enshrine into state law access to private insurance for people with pre-existing conditions.
In the most significant of his health care proposals, Walker will ask the Legislature to join a few other states in adopting a reinsurance programto prop up the individual market, which is used by some 216,000 residents, in a state innovation waiver allowed under the Affordable Care Act, or Obamacare.
I'm sure the fact that this complete 180 turn is happening at the same time that the ACA is suddenly popularandthat he's up for re-election is a complete coincidence.
Still, good policy is good policy, and I'm a big fan of reinsurance programs, so let's see what he has in mind; here's the latest update from a week ago:
Gov. Scott Walker's administration filed a request with the federal government seeking a waiver that would allow Wisconsin to offer a $200 million reinsurance program designed to lower premiums and attract more providers to the private marketplace.
...Under the reinsurance program, the government would provide money to health insurance providers to pay about 50% of medical claims costing between $50,000 and $200,000 starting in 2019. Deputy Wisconsin insurance commissioner J.P. Wieske said insurance providers will be required to file reports showing what rates would have been without the program so the savings could be calculated.
...Walker, a longtime critic of the national healthcare law known as "Obamacare," has rejected federal money to expand Medicaid and argued for years that the law should be repealed. But this year, as he faces re-election in November, Walker has pushed the reinsurance proposal as a way to stabilize the market and lower premium costs for the state's roughly 200,000 people who purchase insurance under the law.
OK, so that's the structure: 50% of claims between $50K - $200K, with an estimated cost of around $200M total. Fair enough. So where's the money coming from?
Walker originally said the state's share under the 5-year program would be $50 million annually with the federal government picking up $150 million. But he said Wednesday the state's share, to be taken from unspecified Medicaid savings, would actually be $34 million a year with the federal government paying the rest.
Hmmm. Wisconsin has around 1.04 million residents enrolled in traditional Medicaid (remember, they didn't expand it under the ACA), costing a little over $7.7 billion per year. On that basis, $34 million (or even $50 million) doesn't sound "too bad" since it's only around half a percent of total Medicaid spending (or around 1.0 - 1.6% of the state's share of Medicaid spending). Still, I'd want to know a lot more about just wherethat $34 - $50 million is coming from (I have no idea whether Wisconsin's Medicaid benefits are comprehensive or crappy, etc).
Assuming that it's not harming a bunch of people, this sounds like a fairly reasonable proposal regardless of Walker's hypocrisy/motives:
There were 227,000 people enrolled in an ACA plan through the private marketplace in Wisconsin in 2017, but that dropped to just over 202,000 this year. The decrease came at the same time premiums increased 44% from an average of $520 to $751 a month. They are projected to drop to $710 next year with the reinsurance program.
Hmmm...let's do the basic math. 202,000 x $751 x 12 months = $1.82 billion. $200 million would actually be around 11% of that, not 5%. Huh.
However...that 202,000 doesn't appear to include the off-exchange ACA market in Wisconsin. 225,000 people actually enrolled in ACA plans this year, so the 202K would be about right for an 11% nonpayment/attrition rate. I recently estimated that the off-exchange market in WI ispretty small (perhaps 7,000 people in ACA plans) which wouldn't change this much, so perhaps I'm wrong or there's another factor I'm missing. Maybe that 5% estimate already takes normal medical inflation trend into account?
In any event, if this is approved and goes through as planned, itsounds like Wisconsin may end up escaping at least most of the next wave of substantial rate hikes expected to hit most states next year due to things like the individual mandate being repealed, and explosion of #ShortAssPlans and so forth.
Conversely, if it isn't approved, the Urban Institute expects rates in Wisconsin to shoot up a good 20% due specifically to GOP sabotage efforts (specifically, the individual mandate being repealed and Trump's #ShortAssPlans executive order) in addition to whatever the normal medical inflation trend is (I'm going to assume around 7%, although the carrier tax was also bumped as well which should knock that down to 5% or so).