Guest Column from Assembly Majority Leader Jim Steineke: Status Quo No Longer Works for State Medicaid Program

May 8, 2015


It’s no surprise that education and health care receive the most funding in the state budget. Education spending represents half of the budget. Health care costs represent a third of the budget. What is surprising, however, is the discrepancy in spending increases between these two budgets over recent years.

One needs to look no further than the 2015-2017 budget currently being debated to observe this trend. K-12 education spending remains flat from the previous budget and higher education is facing a $300 million cut, while Medicaid costs alone are up by $700 million. Over the last several budgets, education funding has seen modest increases, while health care costs have soared by double digit increases. The problem isn’t going away – in fact, it’s getting worse according to Department of Health Services Secretary Kitty Rhoades. There is no way to deny that health care costs are consuming an ever-larger share of the state budget, and are putting a squeeze on other state priorities like education.

Without a doubt, the largest driving-factor attributed to these skyrocketing health care costs is Medicaid, representing a whopping 80 percent of DHS’s total budget. Funded by a combination of state and federal dollars, Medicaid provides an important safety-net for our most vulnerable populations: children, their parents, elderly and disabled. In one form or another, roughly 20 percent of Wisconsin’s population receives some sort of Medicaid assistance.

So what’s behind the increase in Medicaid spending? One of the reasons is a reduction in the federal government’s reimbursement rate for Medicare payments. When the federal government made just one small change to this rate, it cost Wisconsin $52 million more just for this year alone. To further complicate the problem, DHS expects reimbursement rates to keep declining in the future. Another factor contributing to increased Medicaid spending is the disproportionate amount of money directed to the state’s Long Term Care program. While only eighty thousand Wisconsinites are currently enrolled in Long Term Care (representing roughly seven percent of Medicaid participants), the program consumes a disproportionate 40 percent of the state’s Medicaid costs.

Since we’re largely at the whim of the federal government for controlling the Medicaid reimbursement rate, the only viable solution we have as a state is to attempt to control the cost of Long Term Care. That’s why we saw the Governor include modifications to the Long Term Care program in the 2015-2017 budget. However, admittedly, there has been some confusion as to what these changes will actually be.

Assembly Republicans on the Joint Finance Committee have indicated that the Governor’s proposed Long Term Care changes will not remain in the final budget. However, maintaining the unsustainable status quo is simply not an option either. Other budget priorities cannot continue to suffer due to a relatively small percentage of Medicaid participants.

The easy solution would be to simply ignore this problem or to kick the can down the road. However, ignoring the problem puts other important budget priorities in peril. Some might suggest that Wisconsin should accept federal Medicaid dollars offered through the Affordable Care Act as a solution. But let’s be clear, this “solution” would only offer a onetime ”fix” that would equate to a mere 5 percent of the annual Medicaid budget. Based on the federal government’s inconsistency in funding for reimbursement rates, it would be foolish to continue to rely on federal dollars.

The financially responsible solution is to find ways to offer the same quality of care, if not better, at a more affordable cost. Assembly Republicans believe we can achieve both.

Moving forward, this will be our goal. Our state is a national leader in implementing Long Term Care programs, and we will continue to show the rest of the country how to find innovative solutions to the problems we face. I truly believe that we can offer top-notch health care to our state’s most vulnerable populations without unnecessarily burdening tax payers or creating a strain on other priorities.

Making changes to government programs is never easy, but the Legislature’s job isn’t to sit idly by while a major problem escalates. We’re ready to tackle this issue head on to find a sustainable solution to our skyrocketing Medicaid budget.