The state is on track to cut more than $600 million from Medicaid, but even with those reductions, high demand from the poor for insurance benefits could result in up to a $150 million shortfall, the secretary of Wisconsin's Department of Health Services said Thursday.
Karen Timberlake told the Legislature's budget-writing committee that the $608 million in cuts ordered earlier this year by the Legislature and Gov. Jim Doyle will be met by June 2011. But she warned that because of the recession, which has led to unemployment being 2.6 percentage points higher now than a year ago, unprecedented demand for insurance benefit programs is leading to another budget problem.
Lawmakers on the budget committee asked Timberlake to provide an update on how the department was progressing with the cuts ordered to help deal with a record-high state budget shortfall.
Timberlake outlined some of the 66 areas where cuts were being made, including accounting maneuvers such as delaying payments into the next budget year, increasing the use of generic drugs, reducing reimbursement payments to rural hospitals by 10 percent, and rebidding contracts with managed care companies that oversee the BadgerCare Plus program in Milwaukee and southeastern Wisconsin.
Republicans on the budget committee said the department's approach will shift expenses to the private sector and delay the inevitable by pushing off expenses to the next budget.
"I am very concerned about the long-term viability of the Medicaid program," said Rep. Robin Vos, R-Caledonia.
Sen. Alberta Darling, R-River Hills, said the state's Medicaid program was in crisis.
"This program is snowballing on us," she said. "We are digging ourselves a bigger hole."
The $150 million shortfall projected by the nonpartisan Legislative Fiscal Bureau is due to increased demand under the BadgerCare Plus program, which made all uninsured children eligible for Medicaid in February 2008, and the related Core Plan that provides coverage for childless adults.
The Fiscal Bureau said BadgerCare Plus had 700,000 participants as of Nov. 30, which is far above the average 638,000 expected for the year. That is responsible for up to $125 million of the shortfall, with higher-than-expected Core Plan enrollment adding another $25 million.
If the economy improves and fewer people apply for the state assistance, the shortfall will be reduced, Timberlake said. Any one of four proposals in Congress that would send more money to the states to assist with increasing Medicaid costs would also solve the problem, she said.
If demand doesn't wane or if Congress doesn't send more money, Timberlake said the department is prepared to do what is necessary by July 2011 to eliminate the shortfall.
"It won't be easy," she said.