STUDY: Medicaid Expansion will cost Wisconsin $725 million

By: Brian Sikma

Ahead of any formal release of budget details, some lawmakers and interest groups have urged Governor Scott Walker to consider expanding the state’s Medicaid program. Walker’s first budget expanded Medicaid by $1.2 billion, but that expansion did not make use of funds now available to states through the Affordable Care Act, or ObamaCare. According to a study by the non-partisan Kaiser Family Foundation, such an expansion would cost Wisconsin taxpayers $725 million over the next nine years.

Democratic lawmakers recently asked the state’s Legislative Fiscal Bureau to calculate what the ObamaCare Medicaid expansion would cost Wisconsin. The LFB concluded that the state would save $65 million. Advocates of expanding Medicaid have begun to tout this $65 million savings figure as proof that the expansion is essentially a no-brainer.

“Taking this deal is the right thing to do,” state Rep. Jon Richards (D) was quoted as saying in the Wisconsin State Journal. Robert Kraig, executive director of the far left-wing group Citizen Action of Wisconsin, declared with finality in an op-ed in the Milwaukee Journal Sentinel:

“The case for accepting this investment is so overwhelming that it is hard to believe any responsible leader would seriously consider turning it down.”

But what Kraig and other advocates of the Medicaid expansion are ignoring is the woefully short timeframe of the Legislative Fiscal Bureau’s study. The LFB was able to calculate a $65 million savings only by looking at the first three years of the expansion. During that time the federal subsidies will be at their height, and experts warn that over time the state will be required to assume more and more costs as the federal subsidies are drawn down.

One of the new costs Wisconsin would have to assume is the difference between the new physician reimbursement rates under the Affordable Care Act and the old rates, which would kick in around 2015. “By 2015, it would be up to Wisconsin to pay for the new reimbursement rates to primary-care physicians, or let reimbursement drop down to the old rates,” writes Nina Owcharenko of The Heritage Foundation, a conservative policy center.

According to the comprehensive Kaiser Family Foundation study (PDF page 42), Wisconsin’s overall Medicaid costs will rise by $725 million if the program is expanded. Subsets of spending may or may not expand, but if the federal dollars are accepted the long-term result is a tremendous cost to taxpayers, not a savings.

Some have argued that by moving money around through the various state-supported or state-managed medical assistance programs a measure of savings can be achieved. But that is not the bottom line analysis of the Kaiser study. Medicaid expansion in Wisconsin means more state spending regardless of the short term federal funds that could come into the state.

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