By Jon Peacock, Wisconsin Council on Children and Families

Governor Scott Walker of Wisconsin announced last week that his budget proposal will significantly reduce eligibility for parents in BadgerCare, while partially closing the current gap in BadgerCare coverage for adults who don’t have dependent children. The Governor’s plan will cut in half the income ceiling on BadgerCare eligibility for parents, which has been set at 200% of the poverty level since Governor Tommy Thompson initiated BadgerCare back in 1999.

Governor Walker said the state won’t take the federal money that could finance all of the cost of the expanded coverage of childless adults in the next biennium, and which could actually reduce state spending by an estimated $44 million during that period. Instead, the Governor’s plan will finance the cost of covering an estimated 82,000 additional childless adults by ending BadgerCare coverage for about 87,000 parents (according to DHS estimates). The plan presumes that the state can get a new waiver for covering childless adults in BadgerCare, although that is by no means certain.

Some have called this proposal a compromise or a “middle path.”  I doubt that the parents who lose their BadgerCare coverage will see it that way.

A key aspect of the rationale for the proposal is that the adults over the poverty level who become ineligible for BadgerCare will be able to purchase private coverage through the new health insurance marketplace, known as an exchange. There’s something to be said for that argument, because the parents are potentially able to buy private insurance that way. However, as we explained in yesterday’s blog post, some parents won’t be eligible for exchange subsidies, and some won’t be able to afford that private coverage (even with the subsidies), so thousands of parents now in BadgerCare are likely to become uninsured.

Among the parents who do manage to utilize the exchange coverage, most will have significantly higher costs for their coverage than they have now in BadgerCare. In addition, those parents and their children are likely to be split between between different insurance plans, and research indicates that the reduction in BadgerCare coverage for parents will result in fewer parents getting their kids signed up for BadgerCare.

The tradeoff between covering more childless adults in BadgerCare and fewer parents might make some sense as a compromise if the state didn’t have a considerably better option. However, Wisconsin could cover far more people at considerably less cost to the state and the affected households by utilizing the financing provided by the ACA. A future blog post will explore the cost and coverage projections that support our conclusions. (Update: Here’s that post, including a link to the Fiscal Bureau analysis.)

The Walker Administration is pitching the plan by saying it would reduce the number of uninsured adults in the state by 224,000.  Keep in mind that  much of the estimated reduction in the uninsured comes from requirements in the ACA, such as the creation of exchanges, not because of the specific measures that the Governor has proposed.  In addition, I think that estimate is likely to be too high since some of the parents losing their BadgerCare coverage will become uninsured.

In closing, let’s hope that the Governor’s proposal is the beginning of an ongoing effort to find the most cost-effective way to significantly improve access to insurance and reduce uncompensated care. As WCCF executive director Ken Taylor said today:

“We applaud the Governor for wanting to improve access to care for some of the uninsured childless adults in Wisconsin, but we hope policymakers will take a careful look at other options that will serve more people at a substantially lower cost for the state.”