Wisconsin low-income programs face increasing deficits

If you're still buying the fallacy that we have a huge budget surplus from our "balanced budget", three bits of news that came out this week from state human service agencies should put that notion to rest.

1. The first bit of news is follow-up from something I mentioned 2 months ago. Wisconsin had an increasing amount of people fall into the poverty-related Wisconsin Works (W-2) program in 2013, and it looks like there will be a meeting of the Joint Finance Commission next Wednesday to discuss how to pay for this, as well as go over several other fiscal issues.

To understand why there's a deficit, take a look at the numbers mentioned in the LFB paper showing the increase in W-2 cases and expenses. The numbers go up through last November, and let's use that month as the comparison.

W-2 caseload, Nov. 2012 - 13,626
W-2 caseload, Nov. 2013 - 16,222 (+19.1%)

W-2 expenses, Nov. 2012 $7,007,418
W-2 expenses, Nov, 2013 $8,253,087 (+17.8%)

And the LFB notes that this has been a consistent increase throughout much of 2013, with average caseloads up 15.7% for the year, and average monthly expenses up by 18.2%, and the deficit has opened up as a result.

Caseloads and expenditures did decrease by 1.1% and 2.1%, respectively, in November, 2013. Assuming W-2 paid caseloads and expenditures decline by 1% per month, beginning in December, 2013, an additional $14.7 million would be needed to fully fund W-2 benefits in 2013-14. Additional funding of approximately $13.8 million would be needed to fully fund W-2 benefits in 2014-15, which is not addressed in the 2013 income augmentation plan.

....[C]aseloads and expenditures have increased through most of CY 2013. Although November, 2013, shows a reduction in both caseload and expenditures, it may be premature to assume caseloads and expenditures would continue to decline at the rate of 1% per
month throughout the remainder of 2013-15 biennium. If, for example, it is assumed that monthly expenditures remained flat at the November, 2013, monthly expenditure level ($8,253,087) for the remainder of the biennium, an additional $17.0 million in 2013-14 and $26.3 million in 2014-15 would be needed.

So that's $43.3 million that may be needed to fully fund the increases amount of poverty cases in Fitzwalkerstan over the next 18 months, or there are going to have to be benefit cuts or some other kind of money transfer to make up for it. It's worth keeping an eye on the GOP-dominated JFC to see what they do here- do they do the right thing, set the money aside, and reduce the alleged budget surplus. Or do they cut benefits to the growing number of people in need, continuing the bubble-world austerity policies, and possibly banking the money for later, so they can blow it on more tax cuts?

2. There's another human services deficit that has to be dealt with in Wisconsin, as the Walker Administration revealed there is a $93 million Medicaid deficit. In typical Walker fashion, they dropped this news right before the new year, and the Journal-Sentinel dutifully spun the news as some kind of Obamacare glitch. But a closer look at what has caused the deficit lays the cause of the deficit right at the State Capitol's doorstep.

The first reason for the deficit is something the Wisconsin Budget Project predicted 3 months ago- the state will get a lower match rate from the feds on Badgercare, which means state taxpayers have to make up the difference.

First, as the Fiscal Bureau informed you in an October 7th memo, the most consequential development since September is that the federal medical assistance participation (FMAP) rate for FFY 15 will drop to 58.27%, a decrease of 0.92% compared to what was budgeted in Act 20, the 2013-15 biennial budget. As a result, the Medicaid program will have $52.0 million less revenue this biennium than assumed under Act 20.

The FMAP formula is based on each state’s per capita income compared to the national average over the prior three years. The drop in FFY 15 is partly the result of methodology changes by the federal Bureau of Economic Analysis that resulted in upward revisions to prior year income data for Wisconsin. The FFY 15 decrease is in addition to FMAP decreases in FFY 13 and FFY 14 for the state, as well as recent increases in federal charges for individuals dually enrolled in Medicare and Medicaid. These developments provide a cautionary note about placing too much confidence on the long term stability of federal Medicaid funding.

That last sentence is hilarious. The state might not be able to count on federal matching rates for Medicaid staying the same in the conventional program, but if the Walker Administration had taken the expanded Medicaid funding in Obamacare, they'd be GUARANTEED to have 100% of costs covered for the first 3 years, and 90% after that. Well, unless TeaBag Congressmen lowered the match rate, IF they got that change through Congress in the next 3 years and had Obama sign it (HAH!). Last I checked, both the 100% and 90% figures in Obamacare are a helluva lot more than 58.27%, and a lot more stable, so why aren't we taking it again?

There are a couple of other adjustments to the Medicaid budget, including the recently passed bill that slightly lowers costs due to delaying Medicaid changes by 3 months (and delaying tens of thousands of Wisconsinites from being eligible). But the state also has to make up extra costs as a result of higher-than-expected payments to contractors, and 2013-15 budget scenarios that proved far too rosy.

...the Department is in the process of developing BadgerCare Plus and SSI Managed Care HMO rates and Family Care MCO rates for CY 14. These rates reflect projected changes in service utilization among enrollees for the coming year, based on current fee for service rates. As the result of detailed work by the state’s actuaries and discussions with participating HMOs, the Department estimates the fiscal effect of BadgerCare Plus and SSI Managed Care HMO rates, offset by delaying eligibility changes until April 1, is a $14 million GPR increase.

[T]he budget agreement recently passed by Congress provides a temporary extension through March 2014 to provide eligible individuals 12 months of transitional medical assistance. These are individuals who initially qualified for Medicaid at incomes below 100% FPL, but whose income has subsequently increased above eligibility limits. Permanent federal law allows these individuals an additional four months of eligibility, but in recent years Congress has temporarily provided 12 months of coverage. Act 20 had assumed Congress would not extend this 12 month eligibility, given the implementation of insurance marketplaces. However, the recent federal budget agreement continues the 12 month eligibility extension through March 2014; this projection assumes Congress will act again to extend it through the 2013-15 biennium. (D'oh!)

Finally, this estimate reflects higher projected expenditures for fee for service hospital, personal care, and prescription drugs, as well as smaller savings from audit recoveries, verification of state residency for Medicaid applicants, and federal claiming for certain county services. It also modestly reduces projected Medicaid estate recovery collections as the result of 2013 Act 92.

So expect some more cutbacks in services and higher premiums for Medicaid and related health services, much like we have seen in the last 3 years. Despite the fact that taking Obamacare's expanded Medicaid would more than make up for that $93 million deficit by saving Wisconsinites $119 million, you can bet this administration won't do that common-sense move.

3. And there might be even more Medicaid costs to make up in the state, as the Milwaukee Journal-Sentinel mentioned that the rush to beat the year-end deadline to sign up for the Affordable Care Act has led to an estimated 32,000 Wisconsinites finding out that they are eligible for Badgercare, and don't need to get insurance through the federal exchanges. This is known as the "woodwork effect", and it results in people getting benefits that they always could have received, but never got because they never thought about getting them, or didn't want to take the time or effort it took to sign up, but now have been driven into action since they know Obamacare exists.

This is a good thing from a societal standpoint, as people are getting the medical care they are entitled to, and it'll make for a more stable economy as fewer people fall into financial despair due to medical issues. But it also can cause that $93 million Medicaid deficit to go higher, because the state didn't count on the additional Medicaid recipients when it made its 2015-17 budget.

The latest numbers on federal referrals to BadgerCare raise at least the possibility the net increase in enrollments through Obamacare could be greater than the Walker administration has estimated, [Citizen Action of Wisconsin Executive Director Robert] Kraig said. That's an issue for state taxpayers to watch, especially since the Walker administration reported Monday that state Medicaid programs are already being projected to run over budget by $93 million, or 1.9%, through June 2015.

Jon Peacock, research director of the Wisconsin Council on Children and Families, said it was still too early to say whether BadgerCare Plus enrollments will exceed expectations.

"Whether the enrollment exceeds (projections) isn't something I'm comfortable speculating about," he said.

Kraig said costs from any unexpected BadgerCare enrollees would fall harder on taxpayers in Wisconsin because of a decision by Walker and GOP lawmakers to reject extra federal money available for Medicaid under the health care law.

Yes, you heard that right. Because the Walker Administration decided to TeaBag Obamacare, it becomes likely even more taxpayer funds will be needed for Medicaid if we DON'T take Obamacare's Medicaid expansion. This decision looks dumber by the day, and why Mary Burke, Kathleen Vinehout and the Democratic Party of Wisconsin aren't running ads screaming these facts is beyond me.

God knows I'll keep tracking it, because much like Walker's equally foolish decision not to build the high-speed rail line between Milwaukee, Madison and the Twin Cities, it's a decision whose failure keeps compounding as the years go on.