Iowa finds cheaper way to expand insurance coverage than Wisconsin did
By Guy Boulton of the Journal Sentinel
Iowa has come up with a plan for expanding
insurance coverage for poor people that is similar to the one adopted
by Gov. Scott Walker but at a fraction of the cost to state taxpayers.
On Thursday, the federal government approved a proposal by Iowa that expands its Medicaid program while giving commercial health plans a larger role in expanding coverage through the Affordable Care Act.
The broad structure of Iowa's plan — such as relying more on private health plans and less on the traditional Medicaid program — is similar to the approach developed by Walker and approved by the Legislature to increase the number of people with health insurance.
But in Iowa, the federal government is paying the full cost for the first three years of expanding its Medicaid program to cover all adults. The federal share will eventually decline to 90% of the cost.
In contrast, Wisconsin is paying 40%, and the federal government paying the other 60%.
The difference could work out to several hundred million dollars in additional spending for Wisconsin taxpayers over the next decade.
Unlike Iowa, Wisconsin is declining to accept the federal money available through the Affordable Care Act.
"What is curious about this is Wisconsin has decided to take fewer federal dollars for the same thing," said Sherry Glied, a professor at New York University and a former official in the Obama administration.
The Wisconsin Department of Health Services said Friday that it does not plan to ask the federal government to approve an agreement similar to that reached by Iowa.
"Gov. Walker's goals have put Wisconsin in a position to better manage its finances long-term, while creating a system where every Wisconsin individual and family has access to affordable health insurance either through the marketplace or exchange or through Medicaid," the department said in a statement. "The Wisconsin model ensures people in poverty are covered while also realizing the instability that exists with regard to federal funding."
That contention has been challenged by the administration's opponents, who have noted that Walker's plan still relies on the federal government paying 60% of the cost of expanding the Medicaid program, and whether that money will be available long-term is not guaranteed, either.
"It's hard to see why they are doing this," Glied said. "It's kind of weird."
Roughly 20 states have rejected the additional federal money available to expand Medicaid through the Affordable Care Act. Unlike the other states, though, the Walker administration approach expands health insurance coverage for very poor people while maintaining the governor's opposition to the Affordable Care Act.
But Walker's approach comes at a price: The Legislative Fiscal Bureau estimated earlier this year that it would cost the state $119 million in the two-year budget cycle and potentially hundreds of millions of dollars through 2021.
The estimated cost in the current budget cycle is lower now because the start-up date for coverage was pushed back to April 1, after the botched launch of the marketplaces.
The Walker administration supports the idea of enabling people to shop for the health plan of their choice rather than being locked into a government health program.
The Iowa plan is similar in that it enables more people to shop for their own health plans.
In both Wisconsin and Iowa, adults with household incomes below the federal poverty level — $11,490 for one person and $15,510 for two people — will be eligible for coverage through Medicaid next year.
Adults with incomes above the threshold would be eligible for federal subsidies to buy commercial health plans on the marketplaces set up through the law.
The subsidies in the form of tax credits are available for adults with household incomes between 100% and 400% of the federal poverty level — or $11,490 to $45,960 this year.
But in Iowa, the private health plans will have to provide benefits similar to Medicaid for adults with incomes between 100% and 138% of the federal poverty level — or $11,490 to $15,856 for one person.
They also will not have to pay premiums for the first year.
"It's a significantly better deal than what Wisconsin's providing for people near the poverty line," said Jon Peacock, research director for the advocacy group Wisconsin Council on Children and Families.
The Obama administration and state governors have worked out some interesting compromises, Peacock said. And Iowa's "looks like a pretty good one."
Wisconsin probably would have to tweak its approach to receive the federal money available through the Affordable Care Act, Peacock said.
But he also doesn't expect the governor to consider that.
"He's locked into rejecting the federal money," Peacock said.
On Thursday, the federal government approved a proposal by Iowa that expands its Medicaid program while giving commercial health plans a larger role in expanding coverage through the Affordable Care Act.
The broad structure of Iowa's plan — such as relying more on private health plans and less on the traditional Medicaid program — is similar to the approach developed by Walker and approved by the Legislature to increase the number of people with health insurance.
But in Iowa, the federal government is paying the full cost for the first three years of expanding its Medicaid program to cover all adults. The federal share will eventually decline to 90% of the cost.
In contrast, Wisconsin is paying 40%, and the federal government paying the other 60%.
The difference could work out to several hundred million dollars in additional spending for Wisconsin taxpayers over the next decade.
Unlike Iowa, Wisconsin is declining to accept the federal money available through the Affordable Care Act.
"What is curious about this is Wisconsin has decided to take fewer federal dollars for the same thing," said Sherry Glied, a professor at New York University and a former official in the Obama administration.
The Wisconsin Department of Health Services said Friday that it does not plan to ask the federal government to approve an agreement similar to that reached by Iowa.
"Gov. Walker's goals have put Wisconsin in a position to better manage its finances long-term, while creating a system where every Wisconsin individual and family has access to affordable health insurance either through the marketplace or exchange or through Medicaid," the department said in a statement. "The Wisconsin model ensures people in poverty are covered while also realizing the instability that exists with regard to federal funding."
State's decision 'kind of weird'
The Walker administration and Republican state legislators contend that the federal dollars allocated through the Affordable Care Act will be reduced in future years, potentially saddling states with a larger share of the cost of expanding their Medicaid programs.That contention has been challenged by the administration's opponents, who have noted that Walker's plan still relies on the federal government paying 60% of the cost of expanding the Medicaid program, and whether that money will be available long-term is not guaranteed, either.
"It's hard to see why they are doing this," Glied said. "It's kind of weird."
Roughly 20 states have rejected the additional federal money available to expand Medicaid through the Affordable Care Act. Unlike the other states, though, the Walker administration approach expands health insurance coverage for very poor people while maintaining the governor's opposition to the Affordable Care Act.
But Walker's approach comes at a price: The Legislative Fiscal Bureau estimated earlier this year that it would cost the state $119 million in the two-year budget cycle and potentially hundreds of millions of dollars through 2021.
The estimated cost in the current budget cycle is lower now because the start-up date for coverage was pushed back to April 1, after the botched launch of the marketplaces.
The Walker administration supports the idea of enabling people to shop for the health plan of their choice rather than being locked into a government health program.
The Iowa plan is similar in that it enables more people to shop for their own health plans.
In both Wisconsin and Iowa, adults with household incomes below the federal poverty level — $11,490 for one person and $15,510 for two people — will be eligible for coverage through Medicaid next year.
Adults with incomes above the threshold would be eligible for federal subsidies to buy commercial health plans on the marketplaces set up through the law.
The subsidies in the form of tax credits are available for adults with household incomes between 100% and 400% of the federal poverty level — or $11,490 to $45,960 this year.
But in Iowa, the private health plans will have to provide benefits similar to Medicaid for adults with incomes between 100% and 138% of the federal poverty level — or $11,490 to $15,856 for one person.
They also will not have to pay premiums for the first year.
"It's a significantly better deal than what Wisconsin's providing for people near the poverty line," said Jon Peacock, research director for the advocacy group Wisconsin Council on Children and Families.
The Obama administration and state governors have worked out some interesting compromises, Peacock said. And Iowa's "looks like a pretty good one."
Wisconsin probably would have to tweak its approach to receive the federal money available through the Affordable Care Act, Peacock said.
But he also doesn't expect the governor to consider that.
"He's locked into rejecting the federal money," Peacock said.
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