Extra Fed help means Medicaid won't break Wis budget yet. Why not get more help via the ACA?

I was looking at the end of last weekend for the quarterly update on Wisconsin's Medicaid budget figures. Since COVID-19 broke out in March and many businesses shut down, many more Wisconsinites have had to go on public assistance to get their health insurance. At the same time, there has been large amounts of federal aid handed down from Washington DC to deal with expenses related to COVID-19 (even if they're not doing much for other aspects of state and local government), so I wanted to see how that was all shaking out.

The Wisconsin Department of Health Services sent out the new estimates on Medicaid over the weekend, and it had a pleasant surprise from a fiscal standpoint.

The Department projects a surplus in the Medicaid program of $85.4 million GPR for the 2019-21 biennium.

Whoa! That's especially stunning given that there has been significant increase in Medicaid enrollees in Wisconsin over the last 3 months.

So how did we swing from a projected biennial deficit in December 2019 to a projected surplus in June 2020? One reason is a boost in help in paying for Medicaid from DC.

First, the federal Families First Coronavirus Response Act (FFCRA) increased the Federal Medical Assistance Percentage (FMAP) by 6.2 percentage points for Medicaid benefits in the calendar quarters in which the COVID-19 public health emergency by the U.S. Department of Health and Human Services (HHS) related to COVID-19 is in effect. In April, HHS Secretary Alex Azar extended the public health emergency until July 25, 2020. The extension enables states to qualify for the enhanced FMAP funding from January 1, 2020 through September 30, 2020.

That enhanced FMAP is how you get the following changes in Wisconsin's Medicaid estimates.

Projected Medicaid expenses, Wisconsin 2019-21
December 2019 report
State tax dollars $6.75 billion
Total dollars $21.87 billion

June 2020 report
State tax dollars $6.62 billion (-$130 million)
Total dollars $22.49 billion (+$620 million)

That being said, it's an increase in total expenses of less than 3% while there's been an 8% increase in enrollment since March. And that gives you a hint about another big reason why Wisconsin's Medicaid expenses are in better shape.

...Health care providers from hospitals to to primary care physicians experienced various impacts on their ability to deliver services, ranging from spikes in COVID-related care to reductions in primary care visits and non-critical procedures. At the same time, the Wisconsin Medicaid program has implemented numerous temporary reimbursement flexibilities for provders, including significant expansion of telehealth services. However, due to the typical three or four month lag in provider submitting claims for reimbursement, we are not able to discern clear changes in Medicaid service utilization trends due to the COVID-19 pandemic. As such, this quarter's projection does not attempt to adjust for expected changes in service utilization due to the COVID-19 pandemic.

DHS may be saying that, but it's clear that there is a drop in expenses per capita, and I'd have to think that it's related to the fact that many people (on Medicaid and otherwise) are not taking on regular office visits because either the offices are closed, or because people are avoiding it to lessen exposure to COVID-19.

The Wisconsin DHS does give a warning sign with this projection, one which might help the state have its books balance for the just-completed 2020 Fiscal Year, but has a heavier price for FY 2021 and beyond.

Projected Medicaid balance, FY 2020 and FY 2021
FY 2020 +309.1 million
FY 2021 -$223.7 million
2019-21 net $85.4 million

That projected deficit in the next fiscal year means that we will likely start the 2021-23 biennium with an even larger deficit to make up in a time period where employment and tax revenues are still expected to be lagging.

But that deficit for FY 2021 can be "solved" by one of the main ways that we are slated to run a Medicaid surplus for FY 2020 - an enhanced FMAP. Except instead of getting the Feds to pay for another 6.2% of Medicaid expenses, elected officials in Wisconsin could pass one law, and get the Feds to pay an additional 30.6%!

How? Taking the Medicaid expansion that's part of the Affordable Care Act, which has the Feds pay 90% of all of these everyday expenses. If the LFB estimated that $150 million a quarter would be saved via the enhanced FMAP for 2020, it seems that several hundred millions would be saved with so many people enrolled in full-on Medicaid expansion.

Which is all the more reason that Governor Evers should call for a budget repair bill for FY 2021 as soon as we find out the year-end totals for FY 2020, which likely will happen around Labor Day. And Medicaid expansion should be the centerpiece of that budget repair bill.

Do it, Tony!

This allows more months for the money-saving element of expanded Medicaid to be in effect, which can help fill in budget holes. And it also puts Republicans in the Legislature in the spotlight weeks before the November election, and makes them have to justify not giving this security to so many working-poor Wisconsinites in a time of high unemployment and major uncertainty regarding what the 2021 ACA exchange policies may be. I'm guessing voters ain't gonna buy whatever excuse the GOP tries to give.

Repairing the budget with Medicaid expansion would be a win-win for Evers and Dems. Either Republicans back down and have Medicaid expansion become the law in Wisconsin, or Robbin' Vos, Scott Fitzgerald and other Koched-up GOPs take a very unpopular position right before an election that increasingly looks bad for Republicans.

PRESS THE ADVANTAGE AND DO THE RIGHT THING!