Figure the Governor Uses Arbitrarily Excludes the ACA’s Enhanced Federal Aid
A PolitiFact article in Sunday’s Journal Sentinel critiques an op-ed column by Governor Walker in the July 12 Washington Post, in which he contended that that the federal health care reform law would “devastate” Wisconsin. PolitiFact analyzes four of the factual assertions in the Governor’s column and rates them as false, concluding that the Governor’s op-ed: “cherry-picks data, leaves out critical facts and mischaracterizes some of the numbers, creating a highly misleading impression.”
The article by Guy Boulton and Dave Umhoefer notes that they will look later at the fiscal claims in Walker’s column, such as the assertion that during the period 2014 through 2019: “after all federal aid and tax credits are applied, the state’s portion of the bill [for implementing the ACA] will be $433 million.”
I evaluated some of the problems with the Governor’s column two weeks ago and later in a guest blog post for the Center for Children and Families at Georgetown University. However, it took me a little longer to track down the source of the $433 million figure, which I finally found in the January 2011 testimony of DHS Secretary Dennis Smith to Congressman Ryan’s committee. I hadn’t guessed that the op-ed would use such an early and incomplete calculation of the costs and benefits of ACA implementation, and then neglect to acknowledge the portion of Smith’s testimony that obliquely says the $433 million estimate doesn't account for enhanced federal aid that might approach $1 billion (from 2014 through 2019) if Wisconsin closes the current gap in BadgerCare coverage.
There are a few problems with the total cost claimed in the Governor’s op-ed, but I’ll focus on the most blatantly wrong portion of his statement – the assertion that the amount cited accounts for all federal aid. In fact, the $433 million figure makes the odd assumption that the federal match rate for BadgerCare coverage of adults without dependent children would continue at its current level (60%), which clearly won’t be the case. From 2014 through 2016, the ACA will provide 100% of the cost of covering newly eligible childless adults below 138% of the federal poverty level, and a somewhat lower enhanced match for their coverage in states that already provide Medicaid benefits to those adults.
Many people think Wisconsin will get the 100% match rate for all the low-income adults without dependent children because our current BadgerCare Core Plan coverage falls short of a full Medicaid package of benefits. However, that hasn’t been settled yet in the federal regulations, and it’s possible that Wisconsin will get an increased match of 80% for some childless adults and the100% match for others (who are “newly eligible” because of the cap on Core Plan enrollment). In either case, by 2020 the federal match rate will gradually become 90% for all of that BadgerCare population – far above the current match rate.
In light of the enhanced federal match for covering adults without dependent children, and because of a number of other cost-saving factors, the states of Maryland and Arkansas recently estimated that their budgets will actually have a net gain from implementation of the ACA. That could also be the case in Wisconsin, but it’s not a possibility that the Walker Administration has openly acknowledged. Yet as I pointed out in a Feb. 2011 blog post, if you read between the lines of the Secretary's testimony to Ryan's committee, and if you accept the other assumptions underlying the figures he cites there, you can see the ACA could result in net savings for Wisconsin of more that $500 million. (Many of those assumptions need to be corrected or updated, but the point is that the Secretary buried the reference to the enhanced federal match, and the Governor ignored that cost savings altogether.)
The bottom line is that it would be perfectly fine for Governor Walker to say that it’s unclear what the net cost or gain will be in Wisconsin. But his Washington Post op-ed asserts a very specific figure and claims that number takes into account all federal aid and credits, which is simply not the case.
The Governor's column makes the sensible recommendation that we should examine the effects of the ACA on the states, but that suggestion makes it all the more surprising and disappointing that the cost figure he cited ignores the enhanced Medicaid match rate Wisconsin will get if it chooses to use the ACA to close the gap in BadgerCare coverage.