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2011-2013 Medicaid Efficiencies

Commonsense Changes to Medicaid – Fair and Focused

The mission and cost of Medicaid in Wisconsin have expanded dramatically over the years. One out of every five citizens are now served in one of our various programs (traditional Medicaid, BadgerCare Plus, SeniorCare, and Family Care). Medicaid pays for 45 percent of all births in the state. Medicaid recipients occupy roughly 60 percent of nursing home beds.

State funding for Medicaid had to be significantly increased above last biennium's budget, primarily for two reasons – federal matching funds decreased by $1.33 billion and the previous budget estimates were based on a projected decline in enrollment. But even after an infusion of $1.2 billion of additional state funding for the current budget cycle, we need to find savings to keep the program in balance with the state budget.

Current enrollment in Medicaid is now 1.1 million individuals. Over the past 20 years, the total population of Wisconsin has increased 16 percent, but Medicaid enrollment has jumped 156 percent.

Graph: Growth in Wisconsin Medicaid Caseload: 1990-2010

One out of three children in Wisconsin is now on Medicaid. Medicaid is no longer exclusively for individuals living below the poverty level. More than 120,000 children live in families with income above the federal poverty level; nearly half of these children live in families with income above 150 percent of the federal poverty level.

The picture of how individuals are covered by insurance has changed dramatically over the years. In 1997, the year in which the state Children's Health Insurance Program (S-CHIP) was created, 76 percent of children living in families with income between 100 and 200 percent of the federal poverty level (FPL) were covered by private insurance. In that year, just 14.5 percent of children in that income category were covered by public programs. By 2009, children with private coverage had declined to 56 percent and public coverage (principally through our Medicaid programs) had increased to 43 percent.

Graph: Near Poor Household Residents Under Age 18 by Health Insurance Coverage, Wisconsin, 1997-2009

Although the switch between public and private coverage has been dramatic, it is still important to understand that most children living in families with income between 100 and 200 percent FPL are covered by private insurance and the parents of these children are therefore bearing the cost of coverage (as well as contributing to the cost of those on the Medicaid programs through taxes). Moreover, Medicaid provides a richer benefit package for children than what is typically offered in the private sector.

In 1997, only 6.5 percent of adults (ages 18-64) with income between 100 and 200 percent FPL were covered by a public program and 70 percent were covered by private health insurance. By 2009, 30 percent of such individuals had public coverage and those with private coverage dropped to 49 percent.

Graph: Near Poor Household Residents Aged 18-64 by Health Insurance Coverage, Wisconsin 1997-2009

There are approximately 53,000 non-disabled, non-elderly adults on Medicaid with income above 133 percent of FPL. The federal government has advised that these individuals can be dropped from coverage, which would save the state over $60 million GPR per year. We are determined to avoid this option, but believe it is a matter of fairness that families enrolled in Medicaid who have income comparable to their neighbors should be expected to contribute a reasonable amount to the cost of their coverage.

Last year, more than 1.4 million individuals were enrolled in Medicaid for at least part of the year. Spending is concentrated among a small group of individuals. Over half of enrollees incurred costs of $1,000 or less in 2010 and accounted for less than 5 percent of total costs. But 58 percent of all Medicaid spending was made on behalf of just 5 percent of the population. There are about 40,000 individuals who are elderly or have a disability (or both) enrolled in the Family Care program, which provides supports and services to those in need of long term care. Their combined Medicaid costs (long term care and acute medical care) exceed $1.5 billion. Many of the individuals in Family Care are also enrolled in Medicare but those costs are not included.

The changes we are proposing are described individually in detail below. Savings are generated across each of the four different categories of reform eligibility, benefits, service delivery, and payment. We also still have proposed changes under development, so please check back periodically for updates. We value your comments and each will be considered before we formally submit changes to the federal government for approval.

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Last Revised: November 01, 2011