Medicaid Shell Game – Part Two

A while back I wrote about the annual/bi-annual shell game that is perpetrated  in Wisconsin with the Medicaid program – specifically, the SNF funding and reimbursement components thereto.  Now that the Joint Finance Committee of the Legislature has completed its budget process, we can see, fully exposed, how much of the shell game has really been played.

Wisconsin, like all states in the nation, has a deficit – no suprise.  Wisconsin also, like most states, has watched its deficit level grow over the past few months as tax receipts have been lower than projected, primarily of course due to the overall poor economy, lack of jobs, loss of business revenue, real estate sales doldrums, etc.  Where Wisconsin is different is the approach the Governor and the Legislature have taken to crafting a budget that addresses the deficit (I’ll state plainly right up front – “addresses” should not be read as “fixes”).

The Wisconsin solution to addressing budgetary shortfalls is to “ratchet” and I mean “crank” up taxes and fees.  This is plainly obvious when the Medicaid program is reviewed, even without a microscope – the shell game is visible for all to see.  The sleight-of-hand trickery is to extract taxes (rarely are they called this so plainly) either openly or hidden in the form of fees, from every imaginable source, under the guise of achieving additional Federal matching dollars, all while cutting actual spending and siphoning off the additional revenue to “balance the budget”.  The reality is, the budget won’t be balanced as not only does the “math” become funky but the pork politics that weaves throughout the budget will not allow true deficit reduction let alone balancing to occur.  Fundamentally, the only thing that will truly balance the budget is an economic recovery; a return to a period of sufficient prosperity where revenue from taxes from all sources rises as a result of a healthy business environment (business does well, employs people, pays wages, the people pay taxes, consume again via purchasing homes, etc.).  In Wisconsin, the proposed budget is so economically regressive (increased spending, increased pork, increased taxes) that state induced recovery via the budget is nigh on to impossible (positively impractical).

I know – this post is about Medicaid not politics but frankly, not understanding one makes the other harder to understand.  On Medicaid, here’s the meat of the Joint Finance Committee’s “budget”.  NOTE: There is truly nothing “joint” about this Committee proposal as de facto, the Committee is controlled (dominated) by the Governor’s party.  It for all intents and purposes is the Governor’s budget, negotitated within his party and beholding to the Governor’s special interests and the interests of the party (see the “pork” spending within the budget to get a full dose of the special interests at play).

  • Nursing Home Funding: Double the bed tax from current $75 to $150 in 09-10 and then, jump to $170 in 10-11 (don’t believe that this level will necessarily hold).  The tax will be used to fund a 2% increase in the Medicaid rate.  See my first post on the Wisconsin Medicaid Shell Game to catch how this swindle really works and why 2% doesn’t mean 2% and where likely, a chunk of the income Federal match will go.
  • Medicaid Program Cuts: Reduce overall program spending by $580 million – no specifics on where and how but no entity is protected. 
  • Medicaid Funding/CPE Funding for County Nursing Homes:  This funding actually increases – providing $10M in General Purpose Revenue to offset county nursing home operating deficits.  Surprisingly (or perhaps not), the provision also includes protections, keeping any surplus funding achieved within the allocation – not allowing the State to keep any overrages. 
  • Family Care: Wisconsin’s Medicaid waiver program picks ups nearly $9M in funding with a specific directive to reduce the waiting lists for enrollment in Milwaukee County.
  • Assisted Living License Fees: Increase by 27%.
  • Hospital Tax: Originally set at $165 million, increased by the Committee and planned to be raided by the Governor.  Theoretically, the funds gained are supposed to go to hospitals via Medicaid increases – won’t happen anywhere near the dollars raised – just like with Nursing Homes.

So what can be foretold through these shenanigans?  The answer is simple.  More taxes and less Medicaid dollars to go around.  The frank reality is that literally, millions more in taxes will be shuffled through Wisconsin’s Nursing Homes and Hospitals into the great black hole of the State budget deficit.  The illusion that somehow, these taxes will achieve significant or even moderate improvements in Medicaid payments  is just that – “smoke and mirrors”.  The dollars gained, matched by federal dollars, will be siphoned off proportionately and the meager remains doled out with any eye dropper to providers.  Even worse, once a tax is in place, it becomes ready “powder” for unchecked politicians to spend wherever they “deem” the need is highest.  Literally, the analogy is similar to a teenager with no job having unfettered access to mom and dad’s credit or debit card.

The news for providers and consumers of healthcare in Wisconsin is that the economics just got worse – much worse.  There is no place to continue to dump the increase taxes providers will face as consumers can’t bear the brunt, Medicaid doesn’t pay enough to recapture the taxes imposed, the Feds foretell Medicare cuts and/or freezes and health insurers won’t cover the tab.  Unfortunately, like the shell games played on the streets of New York, the person playing against the “sleight of hand” artist  loses every time.  In this case, providers and consumers are the losers and the Legislature and the Governor is the con artist.


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