October 2001 (Vol. 2, No. 10)
Policy Choices in the Wisconsin 2001-03 Budget: Financing and Access
By: Donna Friedsam, MPH Senior Program and Policy Analyst

Wisconsin's recent bieenial budget deliberations addressed several key items related to health care financing and access. This Brief summarizes final action taken on selected health and insurance items in Wisconsin's 2001-03 budget, the priorities these items reflect, and how they relate to the larger health policy agenda.

Prescription Drug Plan: Senior Care

As deliberations continued at the federal level, prescription drug coverage for seniors became a focal point for negotiations within Wisconsin's state budget. The legislature ultimately compromised on a plan. The new "Senior Care" program, funded by an increase in the state's tobacco tax, will cost about $52 million in the first year of the biennium and $78 million a year thereafter. It will cover an estimated 277,000 seniors with incomes up to 240% of the federal poverty level (FPL), including those that "spend-down" to that eligibility level.

Participants must meet a $500 deductible, which will be waived for persons below 160% FPL. The program will charge a $20 annual enrollment fee, and a $5 co-pay per prescription for generic drugs and $15 for brand name drugs.

Medicaid and BadgerCare

Wisconsin has made significant fiscal commitment to these programs. Following W-2 (welfare reform) implementation, the Medicaid program enrollment decreased, but has since rebounded. The state Medicaid agency stepped up outreach and enrollment efforts, and began promoting the new BadgerCare program for low-income families that do not qualify for Medicaid. As a result, enrollment and expenditures these programs have increased significantly.

Nearly a half-million Wisconsin residents are currently enrolled in these programs, including over 84,000 covered by BadgerCare. Overall Medicaid caseload has increased more than 25% from 1998 to 2001. BadgerCare accounts for about three-quarters of this increase. BadgerCare enrollment and program costs exceeded targets in the last biennium, thereby requiring a special appropriation last year to meet existing state obligations.

The Governor and legislature demonstrated continued commitment to these programs within the budget, ultimately increasing state funding for BadgerCare over the next two years. The program parameters were maintained intact, despite several proposals to increase waiting periods, premium cost-sharing and prescription drug co-payments.

Proposed expansions of the current Medicaid eligibility criteria met with mixed results. Medicaid eligibility will be expanded to certain uninsured women under age 65 diagnosed with breast or cervical cancer. The budget eliminated the assets test for traditional "AFDC-Medicaid," a change that was made to comply with the recent BadgerCare waiver. Another proposal would have indexed the Medicaid income limit for Medically Needy, tying it to the Consumer Price Index. This provision failed, thus retaining the current frozen eligibility income limit ($592 per month.)

Access to Dental Care

Dental access and utilization vary dramatically with insurance and income status. The Wisconsin 1999 Family Health Survey and the Medicaid HMO Comparison Report detail these disparities. Dental care appears particularly limited for persons enrolled in Medicaid and BadgerCare; Only 22% of Medicaid HMO enrollees in Milwaukee County visited a dentist in 1999.

Limited access appears related to several factors. These include shortage of dentists in several areas of the state, low participation by dentists in the Medicaid program, limited reimbursement for certain procedures or restricted payment for services by dental hygienists.

The state Department of Health and Family Services (DHFS), in its initial budget request to the Governor, had proposed several steps to improve access to dental care for families enrolled in Medicaid and BadgerCare. These proposals, however, were not included in the Governor's proposed budget.

The Senate went on to insert several provisions, based on a package proposed by the Legislative Council Special Committee on Dental Access. (See Institute Issue Brief June 2001). But these provisions did not survive the final budget process. In the end, the budget includes no broad-based initiatives that address dental access. Instead it provides $650,100 for a rural dental clinic in Menomonie and $850,000 for one in Ladysmith.

Health Insurance Risk Sharing Program (HIRSP)

The HIRSP offers buy-in coverage to individuals with adverse medical histories and others who cannot obtain health insurance due to certain diseases or disability. The state provides a contribution that partially supports overall program costs and subsidizes premiums and deductibles for lower income HIRSP enrollees. In the past year, the HIRSP program enrollment increased 24%, to over 10,000 policyholders.

The final biennial budget cut $1.9 million from the annual base level state funding. This leaves an annual state contribution of $10 million to the annual HIRSP budget, with the remainder funded by policyholder premiums, insurance assessments, and reduced fees to providers. Both legislative houses had directed DHFS to charge assessments to certain insurers that terminate a small employer group health plan. The Governor, however, vetoed this provision, as well as language requiring a study on alternative funding sources for HIRSP. The funding changes in the budget will probably require a larger increase in policy-holder premiums than would have otherwise occurred.

Small Employer Health Insurance

Employers are experiencing double-digit premium increases for employee health insurance coverage, and some small employers face near doubling of their premiums. For several years the legislature and Governor have considered ways to improve purchasing options for small employers. But this requires complex and politically difficult insurance market reforms.

The legislature this year adopted statutory changes to jump-start the small employer purchasing pool. The budget would have changed the rate bands to 10% (rather than the current 35%) above or below the midpoint premium rate for similar insurance policies. The budget would have modified the current definition of "small employer" to include those that employ at least two but not more than 50 "eligible employees," and included various other expansions of eligible employers. The legislature's budget also increased state funding for program costs. In the end, the Governor vetoed all of these changes. Disagreement clearly persists about the degree of appropriate or acceptable government regulation in the small employer market.

Health Care Workforce Shortages

Much has been written of current and projected provider shortages in Wisconsin, particularly in nursing and in dental care. (See Institute Issue Briefs May and June 2001).

The current budget includes $450,000 for a student loan and loan forgiveness program for nurses who go to work in nursing homes. This adds to existing loan repayment programs for physicians, nurse practitioners, physician assistants, and dentists who practice in underserved areas. The final budget did not include any of the provisions that had appeared in various Assembly and Senate versions to support training and practice of dentists and dental hygienists.

Miscellaneous Access Provisions: Community and Women's Health

Women's health programs continue to enjoy broad support. The budget maintains existing support with a small increase ($100,000) to coordinate certain women's screenings, referral, and follow-up, now renamed the Wisconsin Well Woman Program. The budget also sustains a state program, initiated in the previous biennium, that provides $5.5 million over two years to community-based clinics in medically underserved areas. This funding helps support primary care for low income uninsured persons. Additional one time funding of $500,000 is designated in this biennium for two health centers in Milwaukee's central city. These programs, among others, demonstrate the state's ongoing commitment to maintaining certain safety net providers.

Public Health

The current budget does not include major initiatives in public health, beyond adjustments to certain categorical programs. Intensive legislative debate focused on the use of the tobacco settlement funds. This, and events of recent weeks, may indeed increase commitments toward the public health infrastructure and its core functions.