As the U.S. Senate prepares to vote on a Republican proposal to repeal the Affordable Care Act, the possibility looms that Wisconsin could lose billions of dollars over time for the very reason the GOP hated Obamacare in the first place.

That reason was the required expansion of Medicaid to more people and services, which Wisconsin rejected after the ACA was passed in 2010 based on calculations it would cost the state more than the federal aid was worth.

Now, some of the same Republicans in Congress who thought Medicaid expansion was a bad idea from the start are poised to pass a bill that would penalize those states that refused to do so.

Confused? So are many experts in the health care community, who are urging Wisconsin’s U.S. senators to find ways to eliminate what the Wisconsin Hospital Association has estimated as a $36.9 billion loss in federal aid by 2025.

Wisconsin partially expanded its Medicaid health program for the needy known as BadgerCare Plus some years ago. It didn’t do so fully, however, which meant the state has missed out on additional matching dollars from federal taxpayers.

By 2025, the 19 states that didn’t expand Medicaid will lose out on $684 billion in additional federal money, an amount that would translate to $37 billion for Wisconsin alone, based on a report from the Missouri Hospital Association.

To date, Wisconsin taxpayers have spent $679 million more than they would have under a full expansion of Medicaid, the Legislature’s nonpartisan budget office has estimated.

The Senate measure, like the House bill, would phase out the extra money the federal government has provided to states as an incentive to expand eligibility for Medicaid. That phase-out would begin in 2021 and be nearly complete by 2024. Like the House bill, the Senate measure would put the entire Medicaid program on a diet, ending the open-ended entitlement that now exists.

In both bills, however, the Medicaid phase-out is delayed – which is why Wisconsin health-care organizations are concerned.

“It locks in a massive (health care) funding disparity between expansion and non-expansion states,” said Eric Borgerding, chief executive officer of the Wisconsin Hospital Association. “It’s really sort of astounding that you have states that rejected Obamacare and now in the bill they’re being penalized for rejecting it.”

That may be a reason U.S. Sen. Ron Johnson, R-Oshkosh, has signaled his misgivings about the Senate Republican proposal.

“When you take a look at the money spent in Medicaid expansion, it’s a lot of money, and if we lock in that disparity that’s a disadvantage to states like Wisconsin. So yeah, I’m concerned about that,” he told Congressional Quarterly’s Roll Call.

What’s the solution? It’s complicated and even a bit arcane – like much of health care policy – but the options include:

  • Repeal Obamacare’s ongoing hospital Medicare reimbursement cuts in non-expansion states. Doing so would help restore fairness as the non-expansion states continue to pay for expansion in other states. The cuts in Medicare reimbursement, which are primarily for health for the elderly, were used to fund the Medicaid expansion under Obamacare.
  • Put more money into the federal “Safety Net Fund,” which was created to smooth some of the disparities between expansion and non-expansion states. That would net Wisconsin about $70 million a year.
  • Ensure that Medicaid per capita spending caps do not disadvantage non-expansion states. On average, expansion states will see $1,936 per beneficiary compared to $1,158 per Medicaid beneficiary in non-expansion states.

U.S. Sen. Tammy Baldwin, D-Madison, has said she opposes the Senate Republican plan for many reasons – starting with the fact it “has no heart” – and has expressed concerns about Medicaid cuts in general.

Unraveling Obamacare has proven much harder than expected for Republicans, who now face an uphill fight within their own party to do so. Some conservatives think current plans don’t go far enough; others say those plans will hurt many of the people they represent.

With one-sixth of the U.S. economy tied up in health care, the next move by Congress and the White House should be taken with great care.

Tom Still is the president of the Wisconsin Technology Council. Email: tstill@wisconsintechnologycouncil.com.

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