One of the items to track in Wisconsin’s COVID World is how many more people have been added to the state’s Medicaid rolls as jobs have been lost and wages cut. And since COVID started breaking out in March, the number of people receiving Medicaid has grown by at least 18,000 in every month.
You’d think that this would lead to a significant dent in the state’s available dollars, given that we weren’t planning on an increase of 150,000 Medicaid enrollees for 2020 when the Wisconsin budget became law in July 2019. But in fact, the Wisconsin Department of Health Services recently said
we are on track to have a surplus in Medicaid of $289 million for this budget.
This projected surplus is higher than what was reported in our June letter primarily due to two factors. First, this projection assumes that enhanced federal Medicaid funding will be available for four calendar quarters from January through December 2020; the June projection assumed only three quarters of enhanced funding. In March, Congress enacted the federal Families First Coronavirus Response Act (FFCRA), which increased the Federal Medical Assistance Percentage (FMAP) by 6.2 percentage points for Medicaid benefits in the calendar quarters in which the federal COVID-19 public health emergency is in effect. Since our last report, U.S. Department of Health and Human Services Secretary Alex Azar extended the COVID-19 public health emergency for an additional 90 days, until October 23, 2020 (and extended again into January 2021 since this report). The extension is expected to generate an additional $120 million in GPR savings for the biennium compared to the June projection.
Second, this projection reflects additional months of Medicaid enrollment data and updated enrollment estimates for the remainder of the fiscal year. Medicaid enrollment has increased due to the economic downturn brought on by COVID-19 and the continuous enrollment requirements under FFCRA. As a condition of receiving enhanced FMAP funds, FFCRA bars states from disenrolling individuals or imposing stricter eligibility or premium requirements during the public health emergency. Full benefit Medicaid enrollment has increased by approximately 128,000 individuals from January to August 2020. While substantial, this increase is smaller than assumed in our June letter. We project that enrollment will continue to grow by an additional 53,500 full benefit enrollees by June 2021. These enrollment projections are consistent with assumptions used for the Department’s 2021-23 biennial budget request submitted on September 15, 2020.
But what has given the state this sizable surplus in Medicaid is because of added funding from DC taking up more of the bill. If that is allowed to go away, and if there is no stimulus bill that makes up the difference starting in January 2021, then state taxpayers will be on the hook for a lot more. Especially if COVID World continues, and the economy drops back into a second wave of recession.
If you go into
the Department of Health Services’ budget request (as noted in pages 323 to 326 of the PDF), they estimate that state tax dollars for Medicaid will increase by $1.145 billion over the next 2-year budget if there is no extra help coming from DC, and if the State Legislature won’t sign onto the ACA’s Medicaid expansion (which DHS says would save more than $588 million in state tax dollars). Combined with the possibility that revenues will be limited if the economy stays slow, and you can see where 2021-23’s Medicaid budget can be a very troubling situation for Wisconsin if Congress refuses to step up to help states.
But the good budgetary news for Wisconsin is that because a pre-election DC has been willing to shell out additional help in 2020, it does seem like we’ll be OK between now and late June, even with the large increase in people on Medicaid. Therefore, we may not need to make any more adjustments to the state budget and services over the next 8 1/2 months, which is something I would not have counted on a couple of months ago.
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