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Wisconsin’s Growing Cost of Not Adopting Medicaid Expansion

Governor Scott Walker’s decision not to adopt health reform’s Medicaid expansion will cost the state $345 million in forgone budget savings over the next two fiscal years, the nonpartisan Legislative Fiscal Bureau estimates.  That’s $30 million more than the bureau estimated in August.  (The August report also estimated that adopting the expansion would have saved the state $206 million in the past two years.)

Under health reform, the federal government picks up 100 percent of the cost of expanding Medicaid through 2016 and at least 90 percent thereafter.  To receive this special matching rate, though, states have to expand Medicaid eligibility for adults up to 138 percent of the poverty line.

Governor Walker chose instead to extend Medicaid to adults only up to the poverty line through a separate waiver, so Wisconsin receives its regular matching rate, under which the federal government pays 58 percent of the cost of covering this population.  The $345 million in projected savings reflects the higher matching rate Wisconsin would receive by adopting the full expansion.

Other states also face forgone savings if they don’t adopt the Medicaid expansion this legislative session.  In Idaho, a workgroup put together by Governor Butch Otter estimates the expansion would save the state $173 million over the next ten years.  And in Alaska, Governor Bill Walker’s administration estimates the expansion would save the state $6 million next year.