MADISON — The U.S. Supreme Court ruling on federal health reform could lead Wisconsin to try again to make Medicaid cuts expected to cause 64,000 people, including 29,000 children, to lose state coverage.
Meanwhile, the state hasn’t decided whether to pursue the health reform law’s Medicaid expansion, which the court decision in June made optional.
But a top official said the expansion would be costly.
Dennis Smith, secretary of the state Department of Health Services, also said he welcomes Republican vice presidential candidate Paul Ryan’s proposal to give states block grants for Medicaid, the state-federal health plan for the poor.
“The more efficient we become, we would keep those savings,” Smith said of block grants, or lump sums. “That is a huge incentive for the state.”
While the Supreme Court ruling clarified the federal government’s ability to require most Americans to buy health insurance, it left some aspects of Medicaid coverage up for debate or in the hands of states — with possible legal battles to come.
Smith said the part of the ruling that made the Medicaid expansion optional also struck down a requirement to maintain Medicaid eligibility levels.
Kathleen Sebelius, secretary of the federal Department of Health and Human Services, said in a letter to governors last month “the court’s decision did not affect other provisions of the law.”
But Smith said the ruling means Wisconsin could resubmit a proposal to make changes estimated to cause 64,000 people, including 29,000 children, to lose Medicaid coverage.
He has no plans to do so, but it’s an option, he said.
The federal government likely would have to agree to the proposal now because of the court ruling, Smith said.
In April, federal officials approved lesser changes expected to cause 17,000 adults, and no children, to lose coverage.
Nearly 1.2 million people, or one in five state residents, get some kind of Medicaid coverage, including 771,000 on BadgerCare Plus. Maine is making changes to its eligibility levels, which could bring the issue before the courts, according to observers such as Jon Peacock, research director of the Wisconsin Council on Children and Families.
“I think the courts will disagree with Smith’s interpretation” and what Maine is doing, Peacock said.
Smith and Gov. Scott Walker say they won’t decide whether to pursue the health law’s optional Medicaid expansion or set up a required insurance exchange until after the November elections.
But expanding Medicaid coverage to the 170,000 or so people in question, most of them childless adults, would be expensive, Smith said.
The federal government initially would pick up the entire tab, but the state eventually would have to pay some of it, Smith said. Adding enrollees would drive up the pressure to pay providers more, he said, and the state will already struggle to cover people now eligible for Medicaid who likely will sign up once the health law fully starts in 2014.
“Until we get the current program sustainable, it’s hard to think about expanding,” he said.
But forgoing the Medicaid expansion would leave many of those 170,000 people uninsured and unable to pay their medical bills, forcing hospitals and clinics to shift the costs to people with private insurance, said Bobby Peterson, executive director of ABC for Health, a nonprofit law firm in Madison that helps people find health care.
“Hospitals will have to absorb more uncompensated care, which generates higher costs,” he said. “There’s more cost pressure either way.”
Medicaid block grants
Block grants would let states save money by running Medicaid more efficiently, Smith said. The idea has been around a long time, but the selection of Ryan, a Congressman from Janesville, as Mitt Romney’s running mate is bringing new attention to it.
A Ryan budget proposal calls for block grants and reducing federal spending on Medicaid by about $800 billion over 10 years.
Smith said block grants would free states from some cumbersome federal requirements and encourage innovation, such as paying nursing homes differently if they wanted to transition to lower-cost, home-based care.
Patients now on Medicaid would retain coverage, Smith said. “I can do this without changing current eligibility,” he said.
That may be technically true, Peacock said, but the state likely would impose more co-payments, higher premiums and other changes making coverage unaffordable for many.
Block grants “are a way for Washington lawmakers to steadily shrink spending for Medicaid,” Peacock said.