Why Scott Walker’s Alternative To Expanding Medicaid Is A Bad Deal For Wisconsin’s Poor

Wisconsin Gov. Scott Walker (R) has decided to reject Obamacare’s optional Medicaid expansion, opting instead for an alternative — and risky — plan for providing low-income Americans with private health coverage that will prevent many of them from accessing the types of services that they can get under Medicaid.

As Politico reports, Walker’s plan “would take thousands of people currently on Wisconsin’s relatively generous Medicaid program — people who are above the federal poverty level — and move them into the Obamacare exchange instead, where they can get federally subsidized private insurance.” The plan would actually cut Wisconsin’s Medicaid program in the aggregate, shifting low-income Wisconsinites above the federal poverty level away from the public insurance program and into the state’s Obamacare-funded private insurance marketplace. It is also estimated to cut the state’s uninsurance rate in half, and Walker claims that the move is intended to “preserve an essential safety net for our neediest, while protecting our state’s taxpayers from uncertainty” over whether or not the federal government will follow through on its promise to fund the lion’s share of states’ Medicaid expansions.

While it’s an interesting proposal from a GOP governor who is not known for compromising with political opponents, it’s still a raw deal for low-income Americans, as it will restrict the number of specialty medical services that poor Wisconsinites have access to. That’s because Medicaid provides a range of benefits that lower-tier private health plans — which are the only kind that poor Americans will be able to afford under Walker’s plan — don’t cover. As Harold Pollack wrote for The Incidental Economist, “There is no genuine private-sector equivalent for many Medicaid services provided to disabled individuals with special needs.” Those services include specialized benefits such as home care and social worker visits to assist impoverished first-time moms — benefits that might not be necessary for well-positioned Americans who may opt for a lower-cost health plan, but make an enormous difference to low-income populations with unique needs.

Physical disabilities, mental health issues, and a whole host of other socially and financially costly medical conditions disproportionately plague low-income Americans. To illustrate exactly how Walker’s alternative to expanding Medicaid will tangibly affect Wisconsin residents, consider a low-income pregnant woman who suffers from depression. Medicaid currently covers mental health services for “medically needy” pregnant women up until six months after they give birth — but states that expand Medicaid under Obamacare will be able to provide moms these mental services for long after that cutoff. Granted, private plans sold on Obamacare marketplaces must meet federal benchmarks and provide an array of “essential health benefits,” including mental services. But the rules governing the scope and quality of these services are much less stringent for private plans than they are for Medicaid. That’s pretty significant considering the fact that 82 percent of infants living in households with depressed mothers were enrolled in Medicaid or CHIP programs.

Walker will likely use Medicaid and the Obama HHS’s fairly robust protections against shifting premium costs onto beneficiaries as a shield against critics, since he can claim that he is not raising out-of-pocket medical costs for impoverished people. But that claim is misleading, since taking poor and medically-needy people off of Medicaid and placing them in private insurance innately constitutes a benefit cut. Studies have shown that Medicaid beneficiaries are just as pleased with their coverage as their privately insured counterparts, so taking part in Obamacare’s Medicaid expansion to cover more low-income Americans would save Wisconsin “nearly $66 million and insure 175,000 additional childless adults over three years” while giving poor residents expanded access to the specialty health care services that private insurance does not cover.

The governor’s plan is preferable to the GOP-led states that are refusing to expanding Medicaid altogether without any contingencies for covering the poor. But it would be much better for poor Wisconsinites’ medical well-being if Walker followed the example of Republican governors in six states and simply accepted Obamacare’s generous funding to expand the Medicaid program.