Health department report says Medicaid cuts would harm patients, increase health costs

Yahoo

29-04-2025

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Major cuts to Medicaid under discussion in Congress would harm patients, the health care system and the economy in Wisconsin, the state health department said in a report Monday, likely increasing health care costs in the long run rather than saving money.
Depending on what route the federal budget takes to reduce spending on the program, it could cost the state up to $16.8 billion over 10 years, according to the report from the Department of Health Services (DHS).
Medicaid — jointly funded by the federal and state governments — provides health care coverage for low-income Wisconsinites as well as long-term care for elderly people and people with disabilities.
GOP leaders in the U.S. House of Representatives are looking for ways to cut $880 billion from programs under the supervision of the House Energy and Commerce Committee. The budget plan hasn't taken formal shape. Because Medicaid is the single largest program in the committee's budget portfolio, however, 'substantial impacts to Medicaid and other health programs are unavoidable,' the report states.
In Wisconsin Medicaid covers about 1 million Wisconsin residents up to the age of 65 for primary health care through BadgerCare Plus. It also covers long-term care for people with disabilities and the elderly under a variety of different programs. Medicaid covers 20% of state residents and 40% of births, along with 38% of Wisconsin children and 60% of state residents in nursing homes.
'Medicaid is an important part of our health care infrastructure,' said Wisconsin Medicaid Director Bill Hanna at a DHS press conference Monday.
One possibility the report considers is a cap on federal coverage for each Medicaid patient.
Currently the federal share is 60% of the health care costs incurred by Wisconsin Medicaid recipients, with the state paying the remaining 40%. 'This arrangement allows state budgets to cope with unforeseen circumstances, such as economic downturns or faster-than-expected medical cost growth,' the DHS report states.
The report states that a per-person ceiling on Medicaid costs, which Congress is reportedly considering, 'would squeeze state budgets and put Wisconsin taxpayers on the hook if medical costs rise quickly, with cuts to benefits and cuts to provider payments.'
Hanna said that there remains 'a lot of unknowns' in how Congress might structure a payment system with a ceiling. The report considers various scenarios under a cap, including low, medium and high increases in health care costs.
Over 10 years, Wisconsin could lose anywhere from $6.4 billion to $16.8 billion, DHS projects.
Other Congressional proposals include adding higher barriers to Medicaid coverage — primarily through a work requirement.
Work requirements have long been found to eliminate eligible people from Medicaid because of the additional burden to demonstrate that they are eligible.
'Adding an additional burden for this population will certainly result in fewer people making it through, even if they are working, just struggling with the paperwork pieces,' Hanna said.
According to the report, Wisconsin Medicaid enrolled about 191,000 childless adults per month in late 2024. Nearly half of them would be exempt from a work requirement.
'It is unknown how many people would lose coverage simply because it would be difficult to report their hours or wages,' the report states. It calculates that about 52,000 people 'would be at the highest risk for losing eligibility.'
Reducing the Medicaid rolls through a work requirement, however, will carry other costs, the report argues.
'It's not like these people disappear,' Hanna said. 'They still need care that now they just won't have the insurance [to cover]. Meaning hospitals again will be picking up additional costs, which gets passed on to all health care consumers.'
A third approach Congress is said to be considering would reduce the federal government's share of the cost to run Medicaid programs. That could cost Wisconsin up to $93 million, the report finds.
While congressional leaders have pointed to data on 'improper payments' in Medicaid in defense of cuts and say they're targeting 'waste, fraud and abuse,' Hanna said members of Congress are conflating two sharply different issues.
'Improper payments are not fraud, waste and abuse,' Hanna said. 'Improper payments are often documentation errors that can be for any number of reasons.'
Wisconsin's last Medicaid audit — required every three years — found an improper payment rate of 0.5%, which was due to clerical errors.
'In Wisconsin, you're definitely not going to find significant savings' in the form of ineligible people getting covered, he said. 'We have a very robust system in Wisconsin with very few errors.'
Facing substantial federal reductions, the state has four policy options, Hanna said: putting in more state funds to keep the program the same; restricting eligibility, so there are fewer Wisconsinites covered; cutting some services that Medicaid now pays for; or cutting what Medicaid pays to doctors, hospitals and other providers.
If the state pays more, then it will have to raise taxes or divert funds from other priorities. But each of the alternatives has other consequences, Hanna said.
Cutting provider rates 'would have major impacts on our state's health care system,' the DHS report states, with hospitals offsetting those by charging other payers more.
If fewer people are eligible for Medicaid, the rate of uninsured people in Wisconsin will increase, potentially driving up health care costs as well.
'Uninsured rates going up means more uncompensated care' for hospitals and other health care providers, Hanna said.
Reducing the services that Medicaid covers, however, would likely mean that people put off getting health care until an illness or condition gets worse, he said — 'which ultimately means we end up spending more.'
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