Nonprofit, independent journalism. Supported by readers.


Minnesota, Wisconsin diverge on health care coverage for those barely above poverty line

Under the Affordable Care Act, Minnesota will soon expand Medicaid coverage, while Wisconsin is narrowing its requirements for enrollment.

While Minnesota has accepted federal funds to expand Medicaid coverage, Wisconsin is steering more residents to the federally administered to shop for insurance coverage.
REUTERS/Brian Snyder

Editor’s note: This story is a collaboration between MinnPost and the Wisconsin Center for Investigative Journalism. The project was supported by The Joyce Foundation.

People in Wisconsin and Minnesota living just barely above the poverty line are about to see their health care fortunes change — in opposite directions.

In Wisconsin, about 77,500 people are expected to lose Medicaid and will have to obtain coverage through the private exchanges. These include 38,067 people between 100 percent and 133 percent of the federal poverty level, and 35,781 people between 133 percent and 200 percent.

In Minnesota, an estimated 35,000 childless adults whose incomes fall between 75 and 133 percent of poverty are expected to be newly eligible for Medicaid. That number doesn’t include the children and parents who will also be added to the program.

The Federal Poverty Level is $11,490 a year for an individual, $15,510 for a family of two and $23,550 a year for a family of four.

Article continues after advertisement

The Wisconsin changes mean some residents there will soon be required to pay for their coverage while Minnesotans in the same income brackets will be moving onto Medicaid. Medicaid plans are often free to recipients, and the costs are split between the state and federal government.” The change, originally planned for Jan. 1, has been pushed back to April 1.

Currently, Wisconsin offers Medicaid coverage to a broader swath of the population than does Minnesota. Wisconsin’s Medicaid program, known as BadgerCare, covered adults up to 200 percent of the federal poverty level. But long waiting lists meant that the some of those who were eligible were not getting coverage at all.

Wisconsin’s changes mean that an estimated 83,000 childless adults will be newly able to get coverage through BadgerCare. This change, too, will be pushed back to April 1.

Minnesota, meanwhile, had much lower coverage levels but was providing Medicaid to most of those who qualified. Minnesota also has been covering individuals above 200 percent of the poverty level on a Medicaid program called MinnesotaCare, which charges some premiums. That level will drop to 200 percent of the federal poverty level next year.

Under the Affordable Care Act, both states are adopting new rules regarding Medicaid coverage. Both decisions, steeped in politics, will have profound consequences for tens of thousands of people.

Different paths

Minnesota and Wisconsin, while similar demographically, have taken different paths in line with each state’s ruling political party.

Wisconsin policies veer to the right, under Republican Gov. Scott Walker and GOP majorities in the state Senate and Assembly. Minnesota, under Gov. Mark Dayton, of the Democratic-Farmer-Labor Party, and Democratic majorities in both houses of the legislature, has veered to the left.

Minnesota chose to establish its own health exchange, MNsure, to serve as a one-stop marketplace for consumers to shop for and compare health insurance options. Wisconsin opted to use the federal exchange.

The two states also took different approaches in providing health insurance for those just above the poverty line.

Walker, much to the dismay of state Democrats, decided to forgo $119 million in federal funds to expand Medicaid. Instead, he wants to move some of those who had been receiving BadgerCare to the federal health care exchanges, and use the savings to extend coverage to childless adults up to 100 percent of the poverty level.

“It would have been fiscally unsustainable and would have added tens of thousands of people to the Medicaid rolls when my goal was to have fewer people dependent on the government, not more,” Walker wrote of the decision in his new book, “Unintimidated: A Governor’s Story and a Nation’s Challenge.”

In an interview with the Wisconsin Center for Investigative Journalism, Walker said he tried to avoid the two routes taken by most states: accepting the federal expansion at the risk of a future expense to the state or rejecting the federal funds and leaving many residents uninsured.

“I disagreed with Obamacare. I have consistently been against it,” he said. “I tried to provide a viable alternative.”

The number of Wisconsin parents, children and childless adults who receive Medicaid coverage under BadgerCare will go up slightly next year, to about 800,000 people. This figure does not include the Medicaid coverage for the blind, elderly and disabled, which will not change.

In contrast, Dayton accepted federal funding to expand Medicaid to raise the state’s coverage threshold to 133 percent. Previously, Minnesota had covered only those childless adults at 75 percent or less, and 100 percent for others, such as parents and caretakers and those ages 19 and 20.

In Minnesota, an estimated 35,000 childless adults whose incomes fall between 75 and 133 percent of poverty are expected to be newly eligible for Medicaid. That number doesn’t include the children and parents who will also be added to the program. Minnesota expects about 85,000 parents and children will move to Medicaid from MinnesotaCare by 2015.

The newly added 35,000 childless adults will join the 113,000 Minnesotans below 75 percent of the federal poverty guideline. The Minnesota Department of Human Services estimates 880,000 people will be in the program in 2015, as well as 145,000 MinnesotaCare enrollees.

“We’re looking at a tale of two states here,” said Bobby Peterson of ABC for Health, a Wisconsin-based nonprofit advocacy group. “We’re struggling a little bit now, compared to the state of Minnesota.”

Minnesota, he said, embraced health care reform under Democratic President Barack Obama, set up its own marketplace and worked from early on to expand Medicaid. “I think we can look at some of those decisions as part of the reason why [Wisconsin is] behind the curve right now.”

Minnesota moved quickly

In Minnesota, Dayton moved quickly after taking office in January 2011. In his first act in office, he expanded Medicaid eligibility, adding childless adults with incomes of up to 75 percent of the poverty level.

“That was a huge deal,” said Jeremy Drucker, a spokesman for the Minnesota Department of Human Services.

Dayton made Minnesota one of the first states to move forward with the early Medicaid opt-in, despite the Republicans winning control of both houses of the Legislature.

The Department of Human Services said the early Medicaid opt-in will have attracted $1.2 billion in federal aid through early 2014. Those funds represent the typical 50 percent federal Medicaid funding match. The funding, however, will bump up to 100 percent next year for newly eligible childless adults. It also added more than 100,000 adults without children to Minnesota’s Medicaid rolls.

But in the contentious 2012 elections, the Democrats took back control of the Legislature and quickly showed their support for the federal health reform efforts.

In short order, Democratic lawmakers pushed ahead with a state-based health insurance exchange and passed the expansion of Medicaid. They also worked to implement a Basic Health Program to replace MinnesotaCare, a separate public program funded partially with Medicaid dollars for low-income working people.

The full expansion of Medicaid, known as Medical Assistance in Minnesota, is expected to save the state about $117 million over the next two years. It also will have moved about 105,000 people from MinnesotaCare to Medical Assistance by 2015.

“Let’s remember, these are people we were [mostly] already covering … in our MinnesotaCare program, so … [the Medicaid expansion] has saved hundreds of millions of dollars for Minnesota taxpayers,” Human Services Commissioner Lucinda Jesson said.

Jesson said the expansion helps consumers who moved from MinnesotaCare to Medical Assistance by providing better benefits at lower costs. Also, in general, Medical Assistance has better benefits than high-deductible private plans, which will help Minnesotans save money, she said.

The expansion attracted 100 percent federal funding for newly eligible childless adults for the first years of the program, but that level of support will slowly drop to 90 percent by 2020.

The move is also an improvement for health care providers, Jesson said, because it will reduce the amount of uncompensated care that low-income people incur.

“Minnesota’s doing the right thing and saying, ‘Look, the feds are paying us to give Medicaid coverage to guys below 133 [percent of poverty] – let’s do it,’” said Jonathan Gruber, an MIT economist who assisted planning for MNsure and helped design the Affordable Care Act.

Gruber said the Medicaid expansion also helps consumers who purchase private coverage through the exchanges. Typically, he said, those on Medicaid tend to be sicker, so forcing them to purchase private coverage will drive up premiums on the marketplaces because of the way insurers calculate costs.

“Having these low-income people in the exchange, rather than Medicaid, can raise exchange premiums by 10 percent or more, so I think there’s also implications for the broader population that’s buying insurance through the exchange,” he said. “They absolutely will see higher premiums.”

Gruber said he had fewer concerns about the population between 133 percent and 200 percent of the federal poverty level, which is losing coverage in Wisconsin, but will be covered in Minnesota under MinnesotaCare/Basic Health Program.

“I can sort of see Wisconsin’s argument” for removing that group of people, Gruber said. “They were very generous. The federal government is now offering an alternative through the exchanges, and they are saving the state money if the guys go on the exchanges rather than on Medicaid. For Medicaid, the state pays half. For the exchanges, the state pays nothing.”

But Jesson criticized Wisconsin’s approach for people above 100 percent of federal poverty.

“People say, “Well, “$20, $40 premiums — that shouldn’t bother people, but if you only make $15,000 a year, that’s a big difference,” she said. “What it’ll do is drive those people into the cheapest plans, which are the high-deductible plans. [It’s] not good for them, also not good for providers.”

Wisconsin delays

In Wisconsin, Walker declined the Medicaid expansion, along with more than 20 other Republican governors in states such as Indiana, Alabama and Maine.

Of those states, Wisconsin is the only one “that will not have a gap in health care coverage after April 1, 2014,” wrote Claire Smith, spokeswoman for the Wisconsin Department of Health Services, in an email.

Walker delayed implementation of the changes from Jan. 1 to April 1 because of the mess he said the Obama administration had made of its health care roll-out.

“I’m not going to let the failure of the federal government let people fall through the cracks,” Walker said in announcing the delay.

But the delay comes at a cost for others: The estimated 83,000 childless adults at or below the poverty line who are expected to be newly eligible for Medicaid coverage in Wisconsin must also wait until April 1.

The delay has caused howls of protests from state Democrats.

“This is shameful!” shouted Assembly Minority Leader Peter Barca, D-Kenosha, as the delays were passed. But Republicans blamed the delay on the federal government for not having the health care exchanges ready in time.

According to a Legislative Fiscal Bureau report (PDF), Wisconsin will save $23 million by keeping most childless adults off for three more months while continuing to cover people above 100 percent of poverty.

At a University of Wisconsin multi-campus webinar on the Affordable Care Act in November, Wisconsin Medicaid Director Brett Davis was asked about the people who are facing difficult transitions because of the state’s health-care choices.

His reply: “We wish it was a perfect world and we could do everything for everyone.”

mn vs wisc infographic

James Nord is a reporter for MinnPost.

Nora G. Hertel is a reporter for the Wisconsin Center for Investigative Journalism. The Center collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by the Center do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.