$2 billion more for Health Services and SNAP among reasons next Wis budget will be tight

Even though we don't know who Wisconsin voters will choose as their next Governor, state agencies are going ahead with their required budget requests, which were officially submitted into the Wisconsin Department of Administration earlier this month.

J.R. Ross and Anya Van Wagtendonk of Wisconsin Eye's Rewind show gave a good rundown of what these agencies are asking for in their requests (other than the Department of Public Instruction, who will send in their full request in the coming weeks). And one agency in particular is going to need a lot more money just to continue as-is from 2027 through 2029.

So let's talk about the Wisconsin Department of Health Services will require an additional $1.99 billion in state tax dollars over the next two years, which would take care of well over half of the $3.275 billion that is projected to be in the state’s bank when the new biennium starts on July 1, 2027. And that $2 billion is on top of the fact that we already have a state budget that is spending more than it takes in for taxes. Even with the $450 million in higher-than-projected tax revenues for Fiscal Year 2026.

Here are the reasons that the Department of Health Services says the state will need all of this extra money.

Higher than budgeted costs are projected across most Medicaid benefits and programs in FY 27, and the Medicaid program is expected to enter the 2027 29 biennium at an expenditure level higher than its FY27 base budget level. The projected difference between base funding and FY27 adjusted base costs is an increase of $748.5 million GPR in the next biennium, before considering any further adjustments due to intensity, enrollment, or other trends expected to occur in FY28 and FY29. This represents 42% of the total GPR cost to continue.

In addition to higher costs in general, the Wisconsin DHS projects the people served by Medicaid will be sicker and more costly than in previous years.

Intensity is a composite adjustment representing expected changes in the level, frequency, or quantity of service utilization. FY28 and FY29 service lines are adjusted for expected changes in intensity above adjusted base funding. Intensity adjustments are expected to cost $787.8 million GPR over the 2027-29 biennium, or 44% of the cost to continue. FY28 and FY29 service lines are also adjusted to account for the expected costs or savings due to changes in program enrollment. Caseload adjustments are expected to cost $451.1 million GPR over the 2027-29 biennium, representing 25% of the cost to continue.

Along with the general increase in intensity, it'll cost hundreds of millions more to take care of the Medicaid recipients with the largest and most ongoing needs. Some of that is higher costs in general, but also because more Wisconsinites are in need of long-term care services

The largest share of projected cost growth in the next biennium is related to Medicaid long-term care (LTC) programs and services, including fee-for-service (FFS) nursing homes (NHs), Family Care, PACE, Partnership, IRIS, CLTS [Children's Long Term Services] and FFS personal care. These services are expected to cost an additional $816.2 million GPR over base funding in the next biennium, which is a 15% increase to base GPR funding for LTC services. These costs make up 45.5% of the total GPR cost to continue.

Managed LTC programs account for $306.8 million GPR of the cost increase, due to a combination of robust enrollment growth and expected managed care organization (MCO) monthly capitation rate growth of 3% per year in the 2027-29 biennium. FFS NHs account for $220.5 million GPR of the cost increase. FFS NH intensity (cost per resident) is expected to grow by 5.1% annually. In addition, after years of declining annual patient days, Medicaid-funded days grew by 5.5% in FY25 and 2.5% in FY26 and are expected to grow by 3% per year from FY27 through FY29. Ongoing CLTS enrollment growth accounts for $141.3 million of increased costs, with expected enrollment growth of 12% in FY27, 11% in FY28 and 10% in FY29. IRIS enrollment growth and annual intensity adjustments account for $112.2 million of the cost increase and FFS personal care and other home care services make up the remaining $25.6 million.

Put it together, and Medicaid alone is projected to cost nearly $1.8 billion more than what is in its base funding.

The total biennial cost to operate the Medicaid program in the 2027-29 biennium is projected to be $20.339 billion AF ($5.696 billion GPR, $1.561 billion SEG, $1.430 billion PR, and $11.652 billion FED) in FY28 and $21.153 billion AF ($6.114 billion GPR, $1.423 billion SEG, $1.496 billion PR, and $12.120 billion FED) in FY29. It is projected that $688.1 million GPR in FY28 and $1.107 billion GPR in FY29 is needed to fully fund projected costs in the Medicaid program. This sums to a request for additional funding of $1.795 billion GPR in the 2027-29 biennium.

Of course, there is a way to avoid spending all of these extra state tax dollars on Medicaid, and that's by taking the Medicaid expansion that's still allowed under the Affordable Care Act.

Yes, the Trump/GOPs are requiring extra paperwork and other red tape to make people in expansion states keep their Medicaid, but we also know that taking the Medicaid expansion would have reduced state Medicaid costs by $578 million from 2025-27 for the type of expansion that will be available in 2027-29. And given all of the increased costs coming for 2027-29, you can bet that savings would be quite a bit more for 2027-29. Sure, taking Medicaid expansion would cost our Federal government more, but Trump/GOP are also shoving down costs to the State of Wisconsin, so why not make up for that? For example, Tom Tiffany and every other GOP Congressman voted to cause the state to pay more for food assistance as part of Tax Scam 2.0 in 2025.

The One Big Beautiful Bill Act of 2025 (OBBBA) made multiple changes to long-standing federal programs and funding arrangements, including increasing state administrative costs. The most direct impact to Wisconsin is through a reduction in the federal share of FoodShare administrative costs covered by the federal government. The Department requests an increase of $17,451,300 GPR and a decrease of ($17,451,300) FED in FY28, an increase of $17,451,300 GPR and a decrease of ($17,451,300) FED in FY29, an increase of 65.93 GPR FTE, and a decrease of (65.93) FED FTE to provide full funding for the reduction in federal financial participation (FFP) for SNAP administration.

The Governor and Legislature previously provided (approximately $72.0 million in) funding for this purpose in 2025 Act 116. However, the act increased the Department's base budget by only the equivalent of nine months of funding because the federal FFP change takes effect on October 1, 2026, in FY27.

Let me reiterate that this is not due to any increased costs or new workers being hired over the next 2 years, but instead, it is due to less money from DC and the state having to make up the difference.

Bottom line is that Medicaid is one of many state needs that are going to cost quite a bit more in the next budget. Some of that is due to increased costs and caseloads, and some of that is due to Trump/GOPs sending down theHir responsibilities because they thought cutting taxes for billionaires and corpoations were more important. Having to take care of those added and costly needs are going to put a limit on how much taxes can be cut or other services expanded, even with a few billion in the bank on July 1, 2027.