The head of Wisconsin’s Medicaid program says potential cuts to federal Medicaid funding would lead to higher costs and more barriers to coverage for the state’s residents.
The state Department of Health Services released a report Monday analyzing the impacts of reduced federal reimbursement for Medicaid, the joint federal and state health insurance programs that serve people who are elderly, have disabilities or have low incomes.
Medicaid programs, which include BadgerCare, Family Care and IRIS, cover 20 percent of all Wisconsinites, including 38 percent of the state’s children and 60 percent of people in nursing homes, according to DHS.
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The state analysis comes after the GOP-led House of Representatives passed a budget resolution that would reduce spending by the committee that oversees Medicaid by $880 million over the next 10 years, making cuts to the program likely under Republican’s plan.
Congressional committees will identify specific cuts in the coming weeks as they move through the budget reconciliation process, with GOP leaders saying their goal is to have a final resolution by the end of May.
Speaking to reporters Monday, Wisconsin Medicaid Director Bill Hanna said DHS wanted to “start putting some context” around the potential costs to the state even though details of how the funding cuts would be achieved have not been released.
“We think it’s important that we have those numbers out there, and that people are using Wisconsin-based numbers to talk about impacts to Wisconsin,” Hanna said.
Reducing federal share of costs could lead to limited coverage, eligibility in Wisconsin
DHS reports that the federal government currently reimburses Wisconsin for 60 percent of eligible Medicaid costs. One of the federal cost-saving measures that’s been proposed is replacing the cost share formula with a fixed amount per person.
The state analysis found that change would cost the state between $6.4 billion to $16.8 billion over the next 10 years, depending on how quickly health care costs rise. The biggest concern comes from people who are elderly, blind or disabled, groups whose health care costs are significantly higher than other populations receiving Medicaid benefits.
Hanna said Wisconsin could respond to increased program costs in several ways, including using more state dollars to keep coverage the same. He said state lawmakers could also choose to limit who is eligible for programs, what services are covered or the rates paid to health care providers.
But he warned these reductions would have ripple effects throughout the state, including causing more people to become uninsured.
“It’s not like these people disappear,” Hanna told reporters. “They still need care, now they just won’t have the insurance, meaning hospitals again will be picking up additional costs, which gets passed on to all health care consumers.”
Hanna said people who are most at risk of losing coverage under coming changes are adults without dependent children. Republicans in Congress have proposed creating work requirements for adults without disabilities that are similar to those under the Supplemental Nutrition Assistance Program, or SNAP.
Using enrollment numbers from 2024, DHS estimates that 52,000 people could be at risk of losing care. The report also estimates that verifying the new administrative requirements could cost the state up to $6 million annually.
Republicans point to eliminating fraud, waste as way to reach spending cuts
President Donald Trump and other Republicans have repeatedly said they are not looking to cut benefits under programs like Medicare and Medicaid.
Speaking to reporters in La Crosse last week, U.S. Rep. Derrick Van Orden, R-Prairie du Chien, claimed Democrats have lied about Republican’s budget resolution leading to reduced benefits under Medicaid, Social Security and similar programs.
“If you’re an American citizen that is lawfully receiving benefits from the federal government, your benefits will not be cut by a nickel,” Van Orden told the La Crosse Tribune. “I don’t appreciate people fear mongering with seniors, with our folks that have handicaps, with our hungry children.”
In a press release from March, the White House said billions of dollars in cost savings could come from eliminating waste and fraud. The release pointed to a report from the U.S. Government Accountability Office last year that estimated the federal government lost between $233 billion and $521 billion annually to fraud.
The Trump administration asserted that much of this fraud comes from what are called “improper payments” under programs like Medicaid and Medicare. But the federal reports cited by the White House state that improper payment estimates are not estimates of fraud, and include payments with insufficient or missing documentation about claims.
Hanna said finding significant cost savings through fraud prevention is “definitely not” a possibility in Wisconsin, claiming that the state has a “robust system” for verifying eligibility with “very few errors.”
But federal cuts could weaken the state’s ability to verify Medicaid recipients’ income and assets, according to the DHS report. It estimates that Wisconsin could lose $93 million per year if the federal government caps administrative cost reimbursement at 50 percent.
The state currently receives a 75 percent reimbursement rate for operating costs related to determining recipients’ eligibility, which Hanna said has allowed the state to build an efficient system.
“If all of a sudden, all of those federal admin dollars are dropped to 50 percent, that’s a significant loss of funding for those eligibility operations and those IT systems that protect the integrity of our program,” he said.
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