Health Care Connection: State Budget Update

STATE BUDGET UPDATE

The 2015-17 Wisconsin state budget deliberations are well underway in Madison. An important provision for Wisconsin hospitals is a continuation of funding for the Disproportionate Share Hospitals (DSH) program, which was started in 2013 with WMC’s support. The program, which was funded in 2013 to the tune of $74 million ($30 million from the state, matched by $44 million from the federal government) provides payments to hospitals that serve a high number of uninsured and Medicaid patients. The current budget proposal matches the same level of funding.

DSH payments are an important step to help reduce the impact of the Hidden Health Care Tax in Wisconsin. The Hidden Health Care Tax refers to the underpayment from government for services provided by hospitals to Medicaid patients. According to the Wisconsin Hospital Association (WHA), that underpayment totals $960 million annually. That shortfall is made up with higher costs in other areas of health care, such as group health and worker’s compensation. Learn more about the Hidden Health Care Tax from WHA.

Overall, the budget proposal for the Department of Health Services (DHS) is the largest expenditure in the state budget — $23 billion for the two year budget, driven by large increases in the cost of Medicaid.

To address the growing DHS budget, Governor Walker also included reforms to Family Care & IRIS to begin to bend the cost curve downward on Medicaid programs. It is yet to be determined if those reforms will stay in the budget or get removed by legislators.