In Wisconsin, Scott Walker Looks for His Own Way to Insure the Poor

The potential presidential candidate is parting ways with fellow Republican leaders to provide health coverage for low-income residents, a move that could point the way for his party’s entitlement reform plans

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Dan Reiland / Eau Claire Leader-Telegram / AP

Gov. Scott Walker speaks in Eau Claire, Wis., on Oct. 7, 2013.

Ohio’s Republican Governor John Kasich drew a firestorm of criticism from his own party with his recent decision to bypass the state’s Republican-controlled legislature and accept federal funding to expand Medicaid under the Affordable Care Act. Other Republican governors like Tom Corbett of Pennsylvania and Bill Haslam of Tennessee are second-guessing their initial refusal to expand Medicaid coverage for their state’s low-income residents, a central plank of Obamacare which was supposed to account for more than half of newly-insured Americans. After years of opposition and legal challenges, these conservative lawmakers now find themselves faced with a stark choice: Accept federal funding to expand Medicaid or resist President Obama’s signature health care law and open up a gap in health coverage that would leave millions without access to coverage.

But in Wisconsin, Republican Governor Scott Walker has charted a third course, one that rejects additional Medicaid dollars while using the health insurance marketplaces created by the Affordable Care Act to expand coverage. The decision makes Walker the most visible Republican among a group searching for creative ways to benefit from the Affordable Care Act while maintain its opposition to the law.

The 46-year-old governor, who is a favorite of party insiders to run for president in 2016, says that his plan increases coverage for the poor and conforms to a conservative vision of government. For Republicans, the effort could point to a future for entitlement reform. To Democrats, Walker’s plan, which will increase taxpayer burden, leaves too many people uninsured.

Set to take effect this January, Walker’s plan will roll back Medicaid coverage from 200 percent to 100 percent of the federal poverty line, extending standard Medicaid benefits to all low-income Wisconsinites, including about 82,000 additional childless adults who had previously been locked out of the program by the enrollment cap. Those living above the poverty line will be pushed into the federal health insurance exchange, where they will be eligible for subsidized private health care plans under the Affordable Care Act. Walker’s office estimates that under these changes the state will extend health coverage to 224,580 previously uninsured Wisconsin residents. That’s fewer than the 252,678 people who would have gained coverage under the federal Medicaid expansion, but not by much.

Other governors have similarly used the federal health care marketplace to expand health coverage to low-income residents. Last month, the Obama administration approved a plan by Arkansas that allows new Medicaid recipients to shop for private coverage on the insurance exchanges. In Pennsylvania, Corbett has proposed a similar option, which would also alter some current Medicaid benefits and include a job-training requirement. Setting Walker apart is his refusal to accept additional funding for Medicaid, a decision that allows him to continue to vocally oppose Obamacare, while simultaneously embracing the law as a way to advance his entitlement reforms.

“Our unique reforms strengthen Wisconsin’s safety net for those truly in need and help those living above poverty to transition into the market place, while protecting our taxpayers from unnecessary risk and the fiscal uncertainty coming out of Washington, D.C.,” Walker said in a statement.

The plan also sets Wisconsin apart from other states that have declined the federal expansion of Medicaid, which extends coverage to everyone living at or below 133 percent of the federal poverty line. In a recent report published by the Kaiser Family Foundation, the non-partisan research organization, researchers found Wisconsin to be the only state that will provide full health care access to low-income residents of the 25 states not accepting Medicaid expansion. In other states, the decision not to expand Medicaid has opened up a gap in coverage for those who do not qualify for state Medicaid programs, but are too poor to receive federal subsidies on the health insurance exchanges. The study estimates that about five million people will fall into this coverage gap nationwide.

“What this does is it levels the playing field — it expands Medicaid to everyone up to the federal poverty line, expanding Medicaid to everyone up to 100 percent of the federal poverty rate, and it also helps people achieve independence for themselves,” said Dennis Smith, Walker’s former health secretary. “The important thing is that everyone now has access to health insurance – whether they choose it or not is up to them.”

It’s an approach that could prove to be a political boon for Walker, who is frequently mentioned as a potential Republican presidential candidate for 2016. Since taking office in 2010, Walker has gained an avid following among conservatives for his willingness to cut taxes, strong-arm labor unions, expand private school vouchers and force Wisconsin’s fiscal house into order. Although early 2016 polls put Walker’s favorability in the low-single digits, Republican insiders say his ability to pass conservative measures, like Medicaid reform, make him a viable contender.

Walker has not been shy about comparing his record to those of Republicans who shut down Washington to protest the president’s health care law. Earlier this month, Walker published an opinion piece in the Washington Post entitled,  “What Wisconsin Can Teach Washington.”

As debate shifts from repealing the Affordable Care Act to adapting and reshaping it, Wisconsin’s Medicaid changes offer one model for how Republicans can reform the health care law from the right.

Of course, not everyone is pleased with Walker’s approach. His plan cuts more people from Medicaid than any other state, pushing an estimated 92,000 Wisconsinites out of the state health program and into the federal insurance marketplace. While these residents will be eligible for subsidized private health coverage, they will likely be exposed to greater out-of-pocket costs and lose some of the benefits, like non-emergency medical transportation and long-term care, that are provided under Medicaid.

Critics also note that Wisconsin is losing out on one of the biggest perks of Obamacare: The federal government’s offer to foot the entire cost of expanding Medicaid. Wisconsin’s non-partisan Fiscal Bureau, which provides reports to the state’s legislature, estimates that Walker’s alternative Medicaid plan will cost taxpayers an additional $320 million through 2020.

“In the end, it’s going to cost more taxpayers more money and insure fewer people,” said Melissa Baldauff, a spokesperson for the Wisconsin Democratic Party. “Wisconsin used to be a model for investment in public health care — it’s really just a sign of the steady decline in quality of life, which has deteriorated under Scott Walker.”