Cuts to Medicaid would affect wide range of Wisconsin residents, researcher says

As Congress weighs the possibility of deep cuts to the Medicaid program, a longtime health care researcher sees a variety of potential impacts for Wisconsinites.

A budget resolution passed by the Republican majority in the House of Representatives last week calls for a large reduction of federal spending. According to the Congressional Budget Office, in order to reach the spending targets, there would have to be cuts in Medicaid. The bill still needs to undergo a reconciliation process with the Senate.

Medicaid is the joint federal and state program that covers medical costs for millions of low-income Americans. It includes programs like BadgerCare in Wisconsin. 

This news also comes as Gov. Tony Evers renewed his call to expand Medicaid coverage in Wisconsin in his new two-year budget proposal last month. Assembly Speaker Robin Vos, R-Rochester, has pushed back at this effort and maintained that Wisconsin should remain one of 10 states opting to avoid expanding Medicaid.

Donna Friedsam is a researcher emerita who has been studying health care policy and reform for decades at the University of Wisconsin-Madison. Friedsam told WPR’s “Wisconsin Today” that changes at the federal level could have significant ripple effects at home.

“Many people who are on Medicare, who are low-income, also duly rely on Medicaid to cover things that Medicare does not cover,” Friedsam said. “So, Medicaid is actually quite a wide-ranging program and reaches over a million Wisconsin residents who rely on it.”

Friedsam talked with “Wisconsin Today” host Rob Ferrett about how changes in the program could affect Wisconsinites and why many who could use Medicaid are still not enrolled.

The following was edited for clarity and brevity.

Rob Ferrett: House Speaker Mike Johnson has said there’s fraud and inefficiencies in programs like Medicaid. He has also raised concerns about improper payment rates. Is there a significant amount of fraud, inefficiencies and improper payments in Medicaid to make a significant reduction in annual spending?

Donna Friedsam: Just like throughout the insurance system, certainly there [are] payments to providers that may be unmerited, just like there is in any health insurance throughout private and public health insurance. There’s upcoding. There’s overcharging. There’s charges for services that may not exist. But that’s just a marginal amount of the Medicaid program and most Medicaid services are required and needed. 

The conversation we don’t have is that there are many people out there who are actually eligible for Medicaid who aren’t even enrolled in the program. So if anything, we’re spending less on Medicaid than we might be spending if we were covering all of the uninsured people out there who could be enrolled in the program. In terms of provider payments, Medicaid actually pays substantially less to providers in terms of prices than does private insurance. 

RF: Another notion that comes up from time to time is the idea of making Medicaid into a block grant program. How would that change the program?

DF: A block grant would be a substantial challenge for states. While we hear that states are interested in having flexibility for how to manage their Medicaid programs, states do have a fair amount of flexibility in that they can apply for various waivers to existing Medicaid regulation to experiment with the program. But a block grant would essentially set the amount that the federal government provides to states, regardless of how many people end up qualifying for the program or what the health needs are of the people that enroll in the program. 

So during economic recessions, health crises, demographic shifts in the state … the federal contribution to the program would not change. The state would be left on the hook to manage the program, regardless of how many people are in need for the program. So, it would be a significant economic problem for the state, and the state would have to probably cut the program substantially, just when we need the program the most.

RF: People who don’t qualify for that Medicaid coverage in Wisconsin may qualify for coverage subsidies under the Affordable Care Act. Those subsidies are set to expire at the end of the year. Do we have a sense of how many people fit into this category?

DF: In 2024, we had about 47,000 people who were in that group making 100 to 138 percent of the federal poverty level who enrolled in the Affordable Care Act coverage who would otherwise be eligible for Medicaid expansion coverage if we had expanded Medicaid. 

I want to note that we also have over 60,000 people in Wisconsin who are below the federal poverty level. Technically, they should be covered by Medicaid in our state, [yet they] are currently uninsured. Virtually all those people should be enrolled in Medicaid and are not. That shows that we have problems simply getting people who are eligible enrolled in coverage because there’s so many administrative burdens or barriers to getting people covered. It’s difficult with all the paperwork and all the reporting requirements and the like. So the more kinds of challenges we put in people’s places to get enrolled in the coverage, the more likely people will be uninsured rather than enrolled.