Governor Tony Evers’ latest budget proposal includes a long time ask, an expansion of Medicaid, a policy Republicans in Wisconsin have long resisted. A new report from the Wisconsin Institute for Law & Liberty (WILL), Wisconsin & Medicaid Expansion: A Prescription for Failure, outlines why expanding Medicaid would ultimately burden taxpayers while failing to deliver meaningful improvements in healthcare. The report challenges the notion that expansion is necessary or beneficial, citing higher costs, lower-quality care, and potential fiscal risks.

Wisconsin’s existing Medicaid structure already provides coverage to low-income individuals up to 100% of the federal poverty level (FPL), meaning there are no significant coverage gaps. Despite this, Evers’ plan would expand eligibility to those earning up to 138% of the FPL, shifting thousands of Wisconsinites from private insurance onto Medicaid. This shift could have severe consequences, including increased healthcare costs and a decline in care access.

Rising Costs and Diminished Care

The WILL report found that Medicaid expansion is associated with higher per capita healthcare spending. Expansion states spend an average of $215.59 more per person annually, a 2.1% increase compared to non-expansion states. This increase is largely due to cost-shifting, where private insurance holders end up paying more as hospitals and doctors compensate for Medicaid’s lower reimbursement rates.

Another major concern is access to care. Only 74.3% of doctors accept new Medicaid patients, compared to 96.1% who accept private insurance. By moving individuals from private plans to Medicaid, the state risks worsening access and quality of care for new and existing Medicaid recipients. Additionally, expansion states have a history of redirecting Medicaid funds away from the most vulnerable populations—children, the elderly, and the disabled—toward childless adults.

The Budgetary Risks in the Trump Era

A critical financial concern is the long-term stability of federal funding. The current federal match rate for Medicaid expansion is 90%, but discussions around reducing the federal deficit could see this rate drop to 60%. Such a cut would force Wisconsin to absorb an estimated $285 million in additional costs annually.

States that expanded Medicaid also experienced unforeseen budgetary strains. Nationwide, the number of enrollees exceeded projections by 160%, and the cost per enrollee was 64% higher than expected. Governor Evers has signaled an interest in reinvesting short-term savings from expansion into additional Medicaid services—expenditures Wisconsin would still have to fund long after initial federal incentives disappear. This would leave Wisconsinites paying more for Medicaid, and other services which will require more taxes or a cut in services. 

Growing Concerns Over Improper Payments

Medicaid expansion has also been linked to significant waste. In 2018, improper Medicaid payments totaled $35 billion, but by 2020, that number had skyrocketed to $90 billion. Expanding eligibility increases the likelihood of improper payments, further straining Wisconsin’s healthcare budget.

A Better Path Forward

WILL’s report argues that instead of expanding Medicaid, Wisconsin should pursue policies that reduce healthcare costs and improve quality by fostering competition and innovation. Given that only 10% of Wisconsin’s uninsured population falls between 100-138% of the FPL, Medicaid expansion would have a negligible effect on the state’s uninsured rate—reducing it by just 0.36 percentage points.

For many in this income range, affordable private insurance is already available through the exchange, with some silver plans costing as little as $35 per month. Forcing these individuals onto Medicaid, which offers fewer provider options and lower care quality, does more harm than good.

Governor Evers’ Medicaid expansion proposal may sound appealing, but the evidence from other states shows that it would result in higher costs, reduced access, and long-term budgetary risks. With no major coverage gaps to fill, Wisconsin would be better served by policies that empower consumers and control healthcare spending rather than expanding a government program that has historically underperformed.