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By Dave Umhoefer February 28, 2014

Scott Walker says federal government reneged on Medicaid payments to Wisconsin

One of Gov. Scott Walker’s explanations for rejecting a full expansion of Medicaid under the federal "Obamacare" health care law was this:

The feds won’t be good for the money.

And for more than a year, the Republican governor has cited a piece of recent state budget history as evidence.

Most recently, Walker made his case to a national cable audience in a Fox News Sunday appearance on Feb. 23, 2014, telling interviewer Chris Wallace he doubted the federal law’s promise to cover 100 percent of the expansion for three years and no less than 90 percent thereafter starting in 2020. State taxpayers pick up the rest.

"That commitment is not going to be there and taxpayers all across America will be on the hook," Walker said. "They are not going to be on the hook in Wisconsin."

That’s a prediction, but it was followed by this piece of evidence stated as fact:

"Even before the Medicaid expansion I had (provided) $600 million more to Medicaid. Almost 40 percent of that was to fill in the federal government reneging on commitments they've already made even before the Medicaid expansion."

In other words, they’ll break their promise because they’ve done it before.

With Walker’s decisions on Obamacare and Medicaid poised to become 2014 campaign issues let’s look at this one.

Did "federal reneging" on Medicaid payments to Wisconsin pile approximately $240 million in extra costs onto the 2013-’15 state budget?

How it works

The biggest component of the broken promise, in Walker’s view, is a recent drop in the federal government’s share of what Wisconsin spends on Medicaid, which has covered children and parents with children under 19 in low-income households as well as people who are disabled or over 65 and impoverished."

The federal share was 60.21 percent in 2010, but by 2014 fell to 59.06 and is projected to drop further, to 58.27 percent, for the 2015 fiscal year.

That has raised costs to Wisconsin taxpayers, but there’s a major problem in Walker’s contention.

The federal share -- known as the Federal Medical Assistance Percentage, or FMAP -- fluctuates annually and varies from state to state based on a formula dating to Medicaid’s inception in 1965.

That formula is "designed so that the federal government pays a larger portion of Medicaid costs in states with lower per-capita incomes relative to the national average (and vice versa for states with higher per-capita incomes)," a Congressional Research Service paper noted in 2013.

In other words, the standard federal share of Medicaid costs is not promised or guaranteed to hold steady; it must only stay between the statutory minimum of 50 percent and maximum of 83 percent.

It has gone up notably in some recent years as well.

In fact, Wisconsin saw its federal rate rise from 2009 to 2010, and also got a big additional bump to more than 70 percent for almost three years under the federal stimulus law and a subsequent legislative action -- both of which applied nationally.

Another major cost increase Walker has cited to back up his claim in the last year relates to hikes in the cost of premiums, deductibles and copayments that Medicaid pays for so-called "dual eligibles" who qualify for Medicare and Medicaid.

No reversal

Walker spokesman Tom Evenson said these and other cost increases are evidence of reneging by Washington.

But neither the fluctuations in federal help or the dual-eligible cost changes are due to any changes in federal Medicaid law or policy, according to the independent, nonpartisan Wisconsin Legislative Fiscal Bureau. It made this note in a November 2013 memo to state Rep. Jon Richards (D-Milwaukee).

The federal cost-sharing formula has not been changed to reduce matching rates since President Reagan and Congress enacted a temporary reduction for 1982-1984, said Edwin Park, a health-policy expert at the liberal Center on Budget and Policy Priorities.

And the cost increases for "dual eligibles" are routine, reflecting rising health care costs, Park said.

Finally, Walker cites new costs states will have to pick up under Obamacare.

They are real, but two experts told us they do not represent a broken commitment.

Conservative health economist Stephen Parente at the University of Minnesota shares Walker’s skepticism about future federal funding of the Medicaid expansion, especially given Obama’s pull-backs in putting the health-care law into full effect. And he said governors are rightly frustrated by swings in Medicaid payments from Washington.

But Parente said it’s not accurate to call those swings "reneging."

Jon Peacock, research director at the left-leaning Wisconsin Council on Children & Families, agreed. His view is Walker could have made the state less vulnerable to declines in federal help if he had taken the additional federal money available for the Medicaid expansion.

"If we took advantage of the Medicaid expansion funds," Peacock told us, "we would get a much higher matching rate that is locked in (under the law.)"

Our rating

Explaining his rejection of federal money to fully expand Medicaid coverage, Walker said on Fox News Sunday that "federal government reneging" on Medicaid payments to Wisconsin caused more than $200 million in extra costs in the 2013-’15 state budget.

But typical cost-sharing fluctuations, based mainly on a longstanding formula, explain the extra state burden -- not any reversal of course or pulling back on a commitment by Washington.

We rate Walker’s claim False.

Our Sources

Fox News Sunday, Walker-Shumlin interview, Feb. 23, 2014

Governor Walker’s presentation of entitlement reform, Feb. 13, 2013

Interview with Tom Evenson, press secretary, Office of Gov. Scott Walker, Feb. 25, 2014

Interview with Stephen Parente, Chair of Health Finance in Carlson School of Management and the Director of the Medical Industry Leadership Institute at the University of Minnesota, Feb. 26, 2014

Interview with Jon Peacock, research director, Wisconsin Council on Children & Families, Feb. 26, 2014

Interview with Edwin Park, Vice President for Health Policy at the Center on Budget and Policy Priorities, Feb. 26, 2014

Legislative Fiscal Bureau, Medicaid memo to Senator Darling and Rep. Nygren, Oct. 7, 2013

Legislative Fiscal Bureau, Medicaid memo to Rep. Richards, Nov. 27, 2013

State of Wisconsin, Budget in Brief, 2013-15, Reforming Health Care Entitlements, p. 64, February 2013

Legislative Fiscal Bureau, "MA cost to continue re-estimate," May 30, 2013

Legislative Fiscal Bureau, "Comparative Summary of Provisions, 2013 Wisconsin Act 20," August 2013

Wisconsin Legislative Reference Bureau, Medical Assistance and Related Programs (BadgerCare Plus, Family Care, SeniorCare) (Informational Paper 43), January 2013

Congressional Research Service, "Medicaid’s Federal Medical Assistance Percentage (FMAP), FY2014," Jan. 30, 2013

Journal Sentinel, "Walker rejects full Medicaid expansion, says 224,000 more to be covered," Feb. 13, 2013

Milwaukee Journal Sentinel, "Medicaid cost cuts planned," Nov. 6, 2011

National Health Policy Forum, "Medicaid Financing: How the FMAP Formula Works and Why It Falls Short," Dec. 11, 2008

Kaiser Family Foundation, "American Recovery and Reinvestment Act: Medicaid and Health Care Provisions," March 4, 2009

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Scott Walker says federal government reneged on Medicaid payments to Wisconsin

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