Scott Walker's scheme for expanding health insurance coverage to the poor

The first three years of Wisconsin Gov. Scott Walker's administration prove he has a lead apron protecting his political career.

Just weeks after taking office in early 2011, Walker greatly constricted the collective bargaining rights of state workers, leading to 1960s-era demonstrations in the state capitol. Last year he was outvoted in a recall election but hung on because his would-be replacements split the votes.

Having survived riling Wisconsin's middle-class--most of those statehouse demonstrators were teachers and other white-collar employees--Walker is now going after a constituency with a lot less time and energy to organize. That would be the working poor, and the pain he intends to inflict will be through an end run around expanding the Medicaid program in his state. The state's hospitals will pay the price as well. As a matter of fact, it could impact pretty much anyone who's touched by the Affordable Care Act (ACA) in Wisconsin--all 5.7 million residents.

Naturally, Walker's against expanding Medicaid under the ACA, pretty much the status quo among Republican governors. But he's in a prickly situation. Wisconsin's policymakers have had a long history of supporting the social safety net. Robert La Follette, perhaps the greatest progressive politician of the early 20th century, served for 25 years as the state's governor and U.S. senator. Walker may have breezily dismissed all those protestors in the capitol building, but they represented the state's heritage.

Indeed, Wisconsin's Medicaid program, BadgerCare, actually covers enrollees up to 200 percent of the federal poverty level, far more generous than most states. However, budget constraints have capped enrollment, leaving tens of thousands of residents who have been eligible to enroll out in the cold.

Walker's proposal: Roll BadgerCare income eligibility back to 100 percent of the federal poverty level. And put everybody else--including some 83,000 residents previously locked out of coverage--on the exchanges.They could use tax subsidies to then purchase coverage for supposedly as little as $19 a month (although people in many parts of the state would pay premiums nearly double that price).

"I think most people would find it hard to imagine that with the tax subsidies, that $19 a month is somehow not affordable. I think it is," Walker peremptorily told Kaiser Health News and NPR reporters.

Sounds like a neat way to sidestep the potential fire Walker would draw in his state for expanding Medicaid, while appearing more generous than governors like Rick Perry of Texas and Bobby Jindal of Louisiana. KHN and NPR suggested last week that the Centers for Medicare & Medicaid Services will likely approve a waiver for Walker's proposal.

But a policy purchased via the exchange is an exercise in risk-sharing. To get that $19 monthly plan, Wisconsinites would likely have to purchase bronze-level coverage. That means they could pay up to $6,000 in out-of-pocket expenses per person annually if they were grievously ill or injured. For a family making $25,000 a year, hoping to ever cover such a cost is all but a non-starter.

Hospitals could offer charity care coverage by waiving any out-of-pocket costs for any state resident with commercial coverage earning less than $40,000 a year. What they receive from the commercial payers participating in the exchange minus the forfeited cost-sharing payments would probably be equivalent to what they would receive from Medicaid anyway. But should they?

If hospitals make such a concession, individual providers and specialists will come under pressure to waive charges for office visits and lab work. Given that an office visit under the bronze plan will have co-pay of around $40, it's a distinct possibility that many of these policyholders would have a hard time just seeing their primary care physicians, let alone paying for any tests. Pharmacies would also come under pressure to waive costs on prescriptions. More affluent policyholders might agitate for waivers themselves.

And those middle-class and upper-middle class policyholders would have a great reason for making such a request: Placing more than 80,000 people who haven't had a regular source of healthcare for some time could wreak havoc on the risk pool participating in Wisconsin's exchange. Since policies being offered in that state are among the most expensive in the nation already, according to USA Today, it wouldn't be a stretch to see a lot of residents priced out of the market entirely, subsidies or not.

Walker has presidential aspirations for 2016, so he likely believes this patchwork scheme is the best shot of mollifying the conservative base of the GOP while not appearing too hard-edged to more moderate voters. And if it fails, he can always blame President Barack Obama for imposing the ACA on his state in the first place.

However, note that New Jersey Gov. Chris Christie has already signed off on expanding Medicaid next year, all the while expressing skepticism as to whether it will work, and reserving judgment on whether expansion should remain in place in the future. He's the savviest politician in his party by a long margin, and it's a move far savvier than any of the other GOP governors have made on this issue. As President Obama is a lame duck and all the chaos over the ACA will probably settle down over the next year or so, Medicaid expansion is probably not going to be a big issue in the 2016 campaign. And if it is, Christie can pull the plug on it before then.

But all the downsides for Walker's plan have legs. Should it backfire on him, the lead vest that has seemingly protected him from the radioactivity he has inflicted on Wisconsin will probably drag him beneath the surface. And since he's already accumulated a long record of yanking back lifelines, don't expect anybody to toss one his way. –Ron (@FierceHealth)

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