Tens of thousands could be kicked off Medicaid in historically generous states

Pete Marovich/GETTY IMAGES - Wisconsin Gov. Scott Walker speaks at the 2013 Conservative Political Action Conference (CPAC). In Wisconsin, officials want to to take advantage of the new health-care law to shift nearly 100,000 low income people from the health insurance program for the poor into subsidized private plans.

At a time when most states are preparing to expand their Medicaid programs in line with the new health-care law, tens of thousands of people in states with historically generous Medicaid coverage could soon be kicked off the rolls.

In Wisconsin, officials want to to take advantage of the law to shift nearly 100,000 low-income people from the health insurance program for the poor into subsidized private plans.

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An additional 180,000 people in five other states could lose coverage because they are in experimental versions of Medicaid that expire this year and may not be renewable under the new law.

Wisconsin’s Gov. Scott Walker (R) says his approach would restore Medicaid as a program that exclusively serves people in poverty, while enabling the near-poor to make the transition from “government dependence.”

“We’re not talking about pushing people out onto the streets,” he said during his budget address to the legislature Feb. 20. “We are talking about empowering people to control their own destiny.”

Wisconsin’s Medicaid program is among the most expansive in the nation, in some respects even more generous than the higher standard envisioned in the health-care law. Adults with children are eligible if they earn up to twice the federal poverty level — or up to $47,100 for a family of four — as are some childless adults in that income range.

Walker’s proposal to the Republican-led legislature would set the cutoff at the federal poverty line — $23,550 for a family of four — but cover all adults, including those without children, with incomes up to that point.

As a result, tens of thousands of childless adults would gain Medicaid coverage. But many more Wisconsin residents who have Medicaid would lose it: 95,000 adults, nearly all of them parents, whose incomes are above the officially defined poverty level.

Those people with incomes a few notches above poverty will be able to use new subsidies provided by the law to buy private plans on insurance marketplaces — called “exchanges” — that the law sets up in each state starting in 2014. And Walker’s staff projects that, once the subsidies are taken into account, the premiums that the poorest families would pay would be as low as $19 a month.

However, consumer advocates contend that the private plans are likely to charge co-pays and deductibles that will prove out of reach for many low-income families.

“It’s extremely disappointing and surprising that while other states are making progress toward improving access to health coverage for low-income people, we would decrease their options,” said Jon Peacock, research director for the Wisconsin Council on Children and Families.

Bethany King worries about the impact on her family. King, 31, who launched a handyman business with her husband several years ago in a Madison suburb, said they have struggled to support their two young children on their erratic earnings.

Her client base is growing, and King said she expects the enterprise to be in good shape in a few years. But she estimated that her family’s income will barely top $25,000 this year. And month-to-month revenue has been so variable, she said, there have been times, “we’ve literally had to sell our things to make ends meet — you know, eBay-ed off our TV set.”

King has a congenital intestinal problem that required lifesaving surgery twice in recent years. So she said that if she has to replace the family’s Medicaid with a subsidized private plan she will do whatever it takes to pay the premiums. Still, she fears that if the co-pays and deductible are too high, she will find herself thinking twice about going to the hospital the next time her medical condition flares up.

“You have to think: ‘Am I really sick? Or am I going to get stuck with this huge bill I can’t afford for nothing?’ ” she said. “It’s so scary. It’s like having to play Russian roulette.”

The health-care law aims to expand Medicaid by raising the eligible income level in all states to a higher standard — opening the program to adults with incomes up to 138 percent of the federal poverty line, or $32,499 for a family of four.

But the Supreme Court ruled last year that Congress could not require states to participate.

Maine has taken the opportunity to scale back its Medicaid program. The state currently provides Medicaid to adults with children if they earn up to 138 percent of the poverty level, but it will reduce that to the poverty line next year. About 14,500 enrollees will be left without Medicaid coverage as a result.

Though the law’s expansion of Medicaid is now optional, there remains a strong incentive for states to go along with it. The federal government will pay the full cost of covering the newly eligible for the first three years, then phase down its share to 90 percent by 2020. By comparison, the current federal contribution to Medicaid ranges from half to three-quarters of the cost, depending on a state’s finances.

Indiana Gov. Mike Pence (R) wants his state to get the higher match by providing Medicaid to all adults with incomes up to 138 percent of the poverty line, but only if they are limited to a plan that includes a high deductible that the enrollee is partially responsible for.

The state’s Medicaid program currently offers a version of this arrangement to parents with incomes up to 200 percent of the poverty line and to a limited number of childless adults — about 44,000 people in total.

State officials argue that setup encourages more responsible behavior by enrollees: Because they have “skin in the game,” they are more likely to avoid unnecessary and costly treatment, such as going to the emergency room for routine care. The plan also rewards them for seeking preventive care.

However, Indiana had to get a special federal waiver to design the plan that way. The waiver expires Dec. 31, and unless the Obama administration grants a new one, all those covered through it will lose their insurance.

A similar showdown looms between the administration and Iowa Gov. Terry Branstad (R). As many as 70,000 adults — nearly all of them below the poverty line — have been covered through a version of Medicaid that required a waiver, and they are slated to lose their coverage in October.

In Oklahoma, nearly 30,000 adults stand to lose Medicaid coverage provided under a waiver that expires Dec. 31. In Utah, officials are seeking to renew a waiver that covers as many as 20,000 people each year and runs out June 30. (In Maine, officials aren’t even trying to renew a waiver that covers about 10,000 people and expires Dec. 31.)

Judith Solomon, a health policy analyst at the liberal-leaning Center on Budget and Policy Priorities, predicted that it will be much harder for states to make the case for such waivers in the wake of the health-care law.

The waivers are intended to allow states to run demonstration projects that test alternative methods for furthering the goals of the existing law. And with the health-care law offering a way to provide a much broader benefit than either Pence or Branstad is proposing, Solomon wonders how they can argue that their plans advance the law’s objectives.

“The administration will have to look at these waivers in a very different light than when they granted them in the past,” she said. “There’s a real question of whether this can be approved, and, meanwhile, the fate of tens of thousands of people hangs in the balance.”

 
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