UW study claims Medicaid expansion could save state’s health care providers $100 million annually

Contradicts another recent report from UW professor, Wisconsin Institute for Law and Liberty

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A new report from two University of Wisconsin-Madison economists claims Medicaid expansion could save health care providers in the state up to $100 million annually, challenging a recent study co-authored by their colleague.

The new report, authored by economics professors Gwyn Pauley and Matt Wiswall, said the savings would come from the reduction in uncompensated care costs for health care providers, if more people were covered by Medicaid.

The report contradicts a study released in February by UW-Madison economics professor Noah Williams and Will Flanders, research director for the conservative Wisconsin Institute for Law and Liberty, that said Medicaid expansion would cost the state’s economy $600 million annually. That report, which said the burden would be shifted onto those who already have private insurance, has bolstered Republicans state lawmakers’ opposition to expanding the program, but has also drawn criticism from some health care advocates.

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Both reports were released by the UW-Madison-based Center for Research on the Wisconsin Economy.

The new report said the earlier report fails to control for long-term time trends in health care costs and fails to adjust expenditure data for inflation.

“Making either change to their analysis, we show that their results do not hold up, and controlling for state level trends and inflation shows a savings, not a cost, from the Medicaid expansion,” the report said.

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The new report said health care providers will see savings if Medicaid were to cover more uninsured patients, who otherwise might receive charity care or not pay their bills. Wisconsin hospitals provided $1.1 billion of uncompensated services, either as charity care or as bad debt, to patients in 2017, according to a Wisconsin Hospitals Association report.

Taking that into account, the report estimates Medicaid expansion could save the state between $19 million and $103 million by reducing uncompensated care. It also said there isn’t evidence that Medicaid expansion increases ER visits, as the earlier report claimed.

Will Flanders, research director at WILL, said Wednesday he stands by the methodology and research of his study.

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“The reality is, Medicaid expansion in Wisconsin would move a bunch of people off of private health care into government run health care,” Flanders said. “Economics 101 would indicate that this will have some negative impact on the private sector and our study estimated a net cost of $600 million. Therefore we strongly disagree with the UW study and would caution policymakers in their usage of it.”

He also called the new study’s assumption that only new enrollees who previously had private insurance will generate costs “absurd.”

Gov. Tony Evers has included Medicaid expansion, which would extend coverage to about 76,000 parents and childless adults, in his proposed budget.

Former Gov. Scott Walker rejected federal Medicaid expansion funding, arguing the state would ultimately take on the financial burden of sustaining the program over the long-term. Wisconsin is among 14 states to not participate in Medicaid expansion.

Wisconsin is somewhat unusual among non-expansion states, however. It hasn’t expanded Medicaid, but individuals with incomes up to 100 percent of the federal poverty line are already eligible for BadgerCare. If Wisconsin were to expand Medicaid under the ACA, eligibility would be extended to individuals with incomes up to 138 percent of the poverty line.

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