Wisconsin Medicaid has plenty of cash now, but people face cutoffs soon

As a new term begins at the Capitol in Madison, we find out that somehow the State of Wisconsin has EVEN MORE money floating around.

MORE GOOD BJT NEWS: @DHSWI now projects a $774.8 million surplus in the Medicaid fund, up from $504.9 million in its last projection 3 months ago.

If that holds, it will push the state's expected surplus to $6.9 billion at end of this fiscal year June 30. https://t.co/F1TSXflV0w

— JR Ross (@jrrosswrites) January 4, 2023

The better number due to the recently-signed federal spending deal that ironically includes an end to the added coverage of Medicaid expenses from the Feds. And the reason why that helps the state’s bottom line is that we now have a specific end date, which is later than what the State has used in their prior estimates.

In a letter to the Joint Finance co-chairs last week, former DHS Secretary Karen Timberlake wrote the surplus was driven, in part, by the federal government continuing to provide states an enhanced reimbursement rate for those covered by the program.

In September, the agency expected the add-on to expire this coming March. But the omnibus spending bill approved last month added a ratcheting down of the add-on that will continue enhanced matching rates through the end of calendar year 2023.

The add-on has been 6.2 percentage points, and that will still end in March. The federal government, though, will move to a 5 percent add-on for the second quarter of calendar year 2023, 2.5 percent in the third quarter and 1.5 percent in the fourth quarter.

Other factors contributed to the increased surplus, including a downward trend in prescription drug costs.

Good news to see, and the total projected spending in the Medicaid program (which includes the amount that the Feds pay for) also trended down by more than $240 million compared to September’s projection.

But there’s a bigger wildcard in the new spending bill that will affect Medicaid in Wisconsin over the next 3 months. That is due to the end of “continuous enrollment” in the program, which was a COVID-era provision that did not allow states to remove recipients from the Medicaid rolls if they wanted to get that extra 6.2% of federal funding.

We estimate between 5.3 million and 14.2 million people will lose Medicaid coverage during the 12-month unwinding period following the expiration of the Public Health Emergency and the ending of the pandemic-era Medicaid continuous enrollment requirement. https://t.co/Fl6PKcng7Z pic.twitter.com/5Mu0QdDSZA

— KFF (Kaiser Family Foundation) (@KFF) December 23, 2022

So once we get to April, will DHS aggressively go after recipients who may not now qualify for Medicaid, or will the Evers Administration not want them to do that? On the other side, will the WisGOPs in the Legislature jump in and do lame messaging bills to force new conditions on Medicaid (they LOVE to hammer on the poor), or will there be an honest discussion about how to handle Medicaid in the post-COVID world? (I'm kidding, of course WisGOPs won't be honest or serious).

But the "Medicaid cliff" definitely be something that'll come up sooner than we think, and we'll see if we go back to the dumb old days of the Walker era, and the absurd amounts of paperwork and other barriers to health coverage get put back in place. Or have we actually learned something over the last 3 years of expanded coverage rates and additional health access through the COVID era.