Governor Walker’s Health Care Plan Hurts Our Economy
Governor Walker Will Not Expand Medicaid
The Post-Crescent reported
on February 13, 2013 that Governor Walker has decided against accept federal
dollars to expand Medicaid. This is an important decision and will have a big
impact on our economy in the Fox Cities.
Governor Walker’s approach, which he calls a “hybrid,” has
two components. One is that eligibility for Medicaid (Badgercare) will be
tightened. Today, a household is eligible if its income is less than twice the official
federal poverty level of $11,490 for individuals and $15,510 for
couples. Under the Governor Walker’s approach the eligibility level will be
lowered to the federal poverty level, and people whose incomes are above that
will have to buy their health insurance through the health insurance exchange
that will be set up. Since their incomes are very low, they will presumably be
eligible for subsidies under the Affordable Care Act.
Thus, a part of the cost of health
insurance for those who are no longer eligible for Medicaid will be shifted to
the people themselves. This is indeed Walker’s goal. He said, ““I want to have
fewer people in the state who are uninsured, but along with that I’d like to
have fewer people in the state who are dependent on government.”
The Effect Depends on the Size of the Subsidy
How this works out in practice will depend
on the size of the subsidy. Clearly, a family with an annual income of $31,000
a year does not have a lot of money to spend on health insurance. So, if the
subsidy is large enough, this may work well, but there is reason to doubt that
the subsidies will be large enough.
On February 15, 2013, the Post-Crescent reported that at an
analyst who is no friend of Obamacare said, “To me, this [Walker’s plan] is
crazy policy. These exchange plans were never designed for Medicaid-eligible
people. They’re designed for middle-class people who can afford deductibles and
co-pays.”
The Wisconsin Hospital Association agrees.
An article in the Business Journal on
line quotes the association’s president Steve Benton: “Hospital executives are concerned that Walker’s
plan will result in fewer people with insurance coverage and an increase in
uncompensated care.”
Walker’s Plan Will Likely Cost Jobs in the Fox Cities
This is a key point for our economy in the Fox Cities. We
have three major hospitals: Appleton Medical Center, St. Elizabeth and Theda
Clark, and we have two major health care organizations: Affinity and Thedacare.
They are an important part of our economy, and they are among our largest
employers. (Thedacare
and Affinity Health Care are Appleton’s largest employers after
Kimberly-Clark.) Our health care organizations bring money into the Fox Cities
because they are regional centers. Their patients include many people from
outside the Fox Cities. So, any change in health care policies will have a
profound effect on our community.
The income of our hospitals is heavily dependent on Medicare
and Medical Assistance (Badgercare). According to data provided by the Wisconsin
Hospital Association, 44.1% of revenue of hospitals in our area (Analysis
Area 3 of the report) came from Medicare, 10.2% came from Medical Assistance,
40.9% from commercial insurance and 4.7% from all other sources. In other
words, 53.3% came from Medicare and Medical Assistance.
Hospitals report what they call “deductions” from gross revenue,
and these include the cost of charity care as well as the discounts obtained by
large payers like Medicare or insurance companies. According to the report
cited above, such “deductions” account for 49.2% of revenue in our area.
Discounts provided to Medicare accounted for 27.4% of gross revenue, deductions
for Medical assistance 6.8%, discounts to Commercial insurance companies 12.7%
and the cost of charity care was 1.3%. All other deductions were 1.1% of
revenue.