Sunday, August 9, 2020

With Medicaid going up and unemployment benefits going down, Sconnies are in a pinch

Late last week, we got an update on how many Wisconsinites were enrolled in Medicaid in July 2020. And much like the previous months since COVID-19 broke out in the state in March, the Medicaid rolls grew by a sizable amount, surpassing 1.3 million overall.

That's an increase of more than 113,000 since March, and it is worthy to note that the Department of Health Services sent a report in early July that estimated that enrollment would increase by 232,000 between March 2020 and June 2021, as part of a projection of a $85.4 million surplus by the end of the 2019-21 biennium.

But it's worth mentioning a big reason for that 2-year surplus. It's a because of extra federal funds that Congress kicked in to blunt the impact of COVID-19-related closings and increased needs.
...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 in which the COVID-19 public health emergency issued by the U.S. Department of Health and Human Services (HHS) related to COVID-19 is in effect.
This emergency was originally supposed to expire in late July, but it was extended until late October a couple of weeks ago, which means that higher FMAP amount should be in effect through the end of the year.

However, that higher FMAP would still be slated to go away once the emergency is lifted. And with that in mind, the Wisconsin DHS said $224 million more in state tax dollars would be spent on Medicaid in Fiscal Year 2021 compared to state dollars coming in, with even more that would likely need to be made up for in the 2021-23 state budget.

On a side note, I was curious to see if a reduction or banning of expanded unemployment benefits might push more Wisconsinites onto Medicaid. That doesn't appear to be the case, according to this handout from DHS, because the extra benefits aren't counted as part of someone's income when determining if they can get Medicaid. However, those benefits DO count for FoodShare benefits, which means that program could be facing a large increase in qualified applicants starting in August, as those individual are more likely to fall below the income limits, with benefits back below the poverty level.

But even with no effect from the size of unemployment benefits, it is likely that more Wisconsinites will need Medicaid in 2021, making for significant budget pressures. And despite losing 6.2% in FMAP, there's a simple way for Wisconsin to get a 30% higher FMAP. By expanding Medicaid under the ACA to allow the near-poor to be able to get covered. Not only will this save the state hundreds of millions of tax dollars in a tight budget for 2021 and beyond, but the end of expanded unemployment benefits might mean that a lot of Wisconsinites will only be dealing with getting insurance through the ACA exchanges right now.

This is because people that have been laid off but receiving expanded benefits might not have been able to get the Feds to cover much of their premiums under the Obamacare exchanges, because unlike Wisconsin Medicaid, the feds were counting that $600 added benefit as income. So a lot of the newly unemployed may not have gotten themselves covered, and/or expected to be called back, so they never bothered to sign up for Medicaid. Now they are in a scramble, and having more of them be able to get Medicaid would likely lead to more people being covered, and with more financial security than in trying to deal with Obamacare exchanges that may not fit what they are looking for.

In the next 2-3 weeks, we will know how much of a revenue shortfall we may have had in Wisconsin, and should have a better idea as to whether the feds will continue to help the states pay for bills, or if they won't. It's at that time when Governor Evers should call a special session to deal with a budget that has higher expenses for Medicaid and other needs, with fewer revenues to pay for it. And especially now that an increasing number of Wisconsinites are in need of assistance, Medicaid expansion should be central to the budget repair bill to deal with state finances between now and June 30, 2021.

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