• Posting material about the plan and about some of the thornier policy issues on the DHFS website at: http://dhfs.wisconsin.gov/badgercareplus/;
• Utilizing an informal advisory committee to provide feedback on policy options; and
• Holding a series of town hall meetings around the state to give the public an opportunity to learn more about BadgerCare Plus and to help shape the plan.

The advisory committee includes a broad range of members, including health care providers, legislators, business and tribal representatives, and advocates. WCCF is represented on the committee. In addition, WCCF and ABC for Health are cohosting the town hall meetings, in conjunction with DHFS. Our goal, like the Department's, is to involve the public and to be sure people understand what is at stake as the challenging policy questions are debated. Toward that end, WCCF plans in the months ahead to post several brief papers on our website about the key issues that will be decided as BadgerCare Plus is shaped and amended.

Goals and Elements of BadgerCare Plus

The material prepared by DHFS describes a number of goals for BadgerCare Plus:

• Ensuring that all children in Wisconsin have access to health insurance.
• Expanding insurance access for pregnant women.
• Improving the overall health of Wisconsin residents.
• Lowering the long-term cost of the Medicaid program.
• Simplifying and streamlining the safety net programs to produce administrative savings and eliminate barriers to enrollment.

To achieve those objectives, the major elements of BadgerCare Plus include the following:

• Allowing the enrollment of children whose families exceed the current BadgerCare income limit (which is 185 percent of the federal poverty level at the time enrollment, though families can stay in the program until their income reaches 200 percent of the poverty level).
• Offering affordable health insurance to pregnant women with incomes up to 300 percent of the poverty level.
• Raising the income ceiling for parents to 200 percent of the poverty level (though that increase would be offset in many cases by eliminating certain income disregards in order to simplify the program).
• Expanding eligibility to include parents and caretaker adults who temporarily lose custody of their children, to ensure that they can get treatment they might need in order to be reunited with those children.
• Charging premiums, which are set of a sliding scale basis, for families with incomes above 150 percent of the poverty level and for pregnant women above 200 percent of poverty.
• Simplifying the current system by consolidating family Medicaid, BadgerCare and Healthy Start into a single health care safety net program.
• Improving coordination between BadgerCare and employer-provided insurance, in order to reduce the risk that publicly subsidized programs would cause a shift away from employer-sponsored coverage.
• Creating a "benchmark" plan with somewhat narrower coverage for the new categories of people eligible for BadgerCare Plus.
• Reducing administrative costs by consolidating several categories of coverage, simplifying the definition of income, and eliminating the current employer verification requirement.
• Expanding the use of managed care.
• Developing pay-for-performance incentives to help improve the quality of care.

Financing BadgerCare Plus

Because the state budget will continue to be very tight in the 2007-09 biennium, the prospects for including BadgerCare Plus in the next budget bill may depend on the plan's costs. The preliminary DHFS estimates indicate that BadgerCare Plus would actually produce net savings of about $6.1 million in FY 2008 and $1.1 million in FY 2009, as shown in the table.

BadgerCare Plus - Costs and Savings (state GPR $s)

(Source: DHFS Draft Concept Memo)

The department projects that BadgerCare Plus would serve about 40,000 to 50,000 additional people. Most of the increase would come from measures that improve enrollment of people who are already eligible. As indicated in the table, the state cost of the increased coverage would grow to $23.5 million in FY 2009. That figure is held down because much of the financing for the newly eligible children (above 200 percent of the poverty level) would come from premiums and federal matching funds. The administrative cost of covering more people would bring the total cost to an estimated $24.3 million GPR in FY 2009, before one accounts for the savings.

As shown in the table, DHFS estimates that the savings from expanded use of HMOs would grow to $22.9 million GPR in FY 2009. The department also anticipates state savings of at least $2.5 million annually from lower administrative costs because of the consolidation and simplification of the current health care programs. DHFS actually expects far greater administrative savings, but does not budget for more than $2.5 million because the state hopes to use much of those savings to increase reimbursement to counties for their administrative workload.

The federal funding level for the State Children's Health Insurance Program (SCHIP) could pose a challenge for the financing of BadgerCare Plus. Each state's allotment of SCHIP funding is capped, and the President's FY 2007 budget does not meet the full needs of all the states. If SCHIP funding is not available to expand coverage, the state can still proceed with Medicaid funding, but the higher state match requirement might significantly increase the state's share of costs.

Policy Challenges and Questions

A key part of the plan to expand coverage without increasing state spending is to achieve savings by consolidating family Medicaid, Healthy Start and BadgerCare. Because significantly different rules apply in those programs, consolidating them raises a number of important questions about which eligibility and cost-sharing policies to retain. The following are some of the consolidation issues that are particularly important and might be contentious when the legislature considers the plan next year:

Employer verification - In May 2004 the state began requiring that BadgerCare applicants and participants who come up for their annual review get employers to verify their earnings and insurance status, in order to confirm the person's eligibility for BadgerCare. Since employer verification is not required for Medicaid or Healthy Start, the consolidation of the three programs requires a decision about whether to apply the policy more broadly or eliminate it.

In the first 14 months after the new verification requirements were initiated, BadgerCare enrollment fell by more than 25,000 people, a 22 percent decrease. After carefully analyzing various data sources and interviewing a number of people who lost benefits, DHFS concluded that there was little or no increase in the number of people found to be ineligible. Instead, the steep drop in enrollment occurred because low-income families have been deterred from participating by the added paperwork and, in some cases, by the difficulty of getting the cooperation of employers to complete the forms in a timely manner.

Based on that study, DHFS has recommended eliminating the employer verification requirement and focusing instead on other, less burdensome forms of verification for BadgerCare Plus eligibility. However, some legislators might suggest using BadgerCare Plus as an opportunity to apply employer verification to all low-income families, which could be expected to cause a much greater decrease in program participation.

Premiums and co-pays - Families enrolled in BadgerCare who have incomes of at least 150 percent of the poverty level pay a premium of about 5 percent of family income. However, premiums do not apply to participants in Medicaid or Healthy Start (which serves children younger than 6 and pregnant women in families below 185 percent of the poverty level). Thus, this is another area where changes will be necessary when the programs are consolidated.

The draft concept paper for BadgerCare Plus calls for premiums for children and families above 150 percent of poverty and for pregnant women above 200 percent. That would largely retain current policy, though it might result in the imposition of premiums on a small number of current Healthy Start enrollees (if they have children under age 6 who are covered but the parents are not enrolled in BadgerCare).

Medicaid changes enacted in the FY 2006 federal budget give states considerably more discretion in increasing premiums and co-pays. Some legislators might want to use that authority to increase cost-sharing, and BadgerCare Plus offers a vehicle for amendments to make low-income families pay a greater share of the cost for safety net services.

Crowd-out policies - When BadgerCare was initiated in 1999, states were required to adopt policies to prevent "crowd-out," which is the displacement of private health insurance by public programs. The crowd-out policies in BadgerCare, which do not apply to Medicaid and Healthy Start, make potential participants ineligible for coverage if they have been insured in the previous 3 months (with certain exceptions) or have access to an employer-sponsored plan that pays at least 80 percent of costs.

The draft BadgerCare Plus plan addresses the crowd-out issue by putting more emphasis on utilizing or wrapping around employer-sponsored coverage, particularly for families with incomes above 150 percent of the poverty level. DHFS is also considering discouraging crowd-out by creating a "benchmark" package of covered services for BadgerCare Plus, which more closely resembles the type of coverage offered by employers. Although the initial DHFS proposal would just apply the trimmed-down benefit package to new categories of people covered, some policymakers may suggest a narrower package of benefits for everyone currently covered by Medicaid, Healthy Start and BadgerCare.

Not all of the unresolved and potentially contentious issues surrounding the design of BadgerCare Plus are related to consolidation of the current health care programs for families. Some of the other significant challenges that remain to be resolved include:

• finding ways to improve access to dental and mental health care for low-income children and families;
• implementing effective incentives to achieve the broader use of HMOs that would generate some of the savings needed to help finance the BadgerCare Plus plan; and
• creating a more effective system for using "premium assistance," which allows the state to purchase and supplement employer-sponsored coverage.

Conclusion

As currently outlined, BadgerCare Plus seems to offer a very promising and affordable plan for expanding health insurance access for children and pregnant women in Wisconsin. Although the plan probably would not serve all of the roughly 90,000 uninsured children in the state, it would give almost all parents an option to obtain affordable health insurance for their children. Most importantly, it would remove some of the barriers, such as employer verification, that prevent currently eligible families from enrolling in BadgerCare.

Since nothing about the design of BadgerCare Plus is written in stone, the program's impact will depend on future decisions relating to a number of different policy choices. The initial DHFS recommendations could be changed significantly by the legislature, or by a new governor one is elected, and these changes might actually decrease rather than increase access to health care for low-income Wisconsin families. For example, an amended plan might reduce the current benefit package for people now covered by the safety net programs, and could decrease participation by raising premiums and co-pays and by expanding burdensome verification requirements for enrollment.

Only after all the policy choices are resolved will we be able to judge whether "BadgerCare Plus" is still the appropriate name for the initiative, or whether "BadgerCare Minus" is a more appropriate description. But the advancement of this initiative clearly presents an exciting opportunity for all of us to shape a new health care system that has the potential to make Wisconsin a leader in the pursuit of the goal of health care access for all children.