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Wisconsin and Wyoming Tally Fiscal Cost of Rejecting Health Reform’s Medicaid Expansion

August 28, 2014 at 12:00 PM

Recent budget reports from Wisconsin and Wyoming show that their failure to adopt health reform’s Medicaid expansion is costing them millions of dollars in forgone budget savings.

In Wisconsin, the legislature’s nonpartisan Legislative Fiscal Bureau estimates that the expansion, which covers non-elderly adults with incomes up to 138 percent of the poverty line, would have saved the state $206 million in the 2014 and 2015 fiscal years combined.

Governor Scott Walker chose instead to extend Medicaid coverage to adults only up to 100 percent of the poverty line through a separate waiver.  This means that the federal government is paying for the expanded coverage at the state’s regular Medicaid matching rate of 59 percent, rather than the much higher matching rate for health reform’s Medicaid expansion.  (For states that expand to 138 percent of poverty, the federal government will pick up 100 percent of the cost through 2016 and no less than 90 percent thereafter.)  The difference in matching rates is the main reason for the $206 million in forgone savings.

Wisconsin could still save between $261 million and $315 million over the 2016 and 2017 fiscal years by adopting the expansion during next year’s legislative session, the report estimates.  Gov. Walker has justified his opposition to it by arguing that the federal government would ultimately renege on its financial commitment, but those fears are unfounded.

In Wyoming, the state health department projects that the Medicaid expansion would save the state $50 million a year on other health programs for low-income uninsured residents.  As a result, Governor Matt Mead is moving to advance the Medicaid expansion during the coming legislative session.  More than 17,000 uninsured residents would gain access to coverage under the expansion, the Urban Institute estimates.

The 27 states (including Washington, D.C.) that have adopted the Medicaid expansion are already seeing dramatic gains in health coverage and reductions in the cost of providing uncompensated care to the uninsured.  Wisconsin, Wyoming, and the other 22 states that have not done so could realize similar benefits.