Medicaid Expansion in Wisconsin Would Increase Welfare Enrollment, Decimate the Labor Force, and Hurt Hospitals
Key Findings
- By expanding Medicaid, Wisconsin would add at least 448,000 able-bodied adults to their Medicaid rolls—costing roughly $30 billion over the next decade alone.
- Wisconsin’s labor force participation rate has declined by 10 percent over the last two and a half decades while Medicaid enrollment has skyrocketed.
- More than 46,000 Wisconsinites would lose access to private coverage and be forced onto welfare, resulting in nearly $104 million in hospital losses.
- Wisconsin would face a Medicaid shortfall of more than $1.8 billion—the equivalent of losing 14,114 hospital jobs.
Background
The Medicaid program was designed as a safety net for truly needy populations—such as low-income children, people with disabilities, seniors, and pregnant women.1 After the passage of the Affordable Care Act, more commonly known as ObamaCare, states were given the option to expand Medicaid to an entirely new class of able-bodied adults.2 These able-bodied adults are not required to demonstrate a need for benefits beyond meeting income thresholds.3 ObamaCare expansion fundamentally changed the Medicaid program, prioritizing welfare for able-bodied adults over care for the truly needy.4
States across the country have taken the bait, opting to expand Medicaid. As a result, these states have seen Medicaid enrollment and costs soar to new heights.5 Nationwide, Medicaid expansion spending surpassed $1 trillion over the last decade alone.6
Fortunately, Wisconsin has wisely continued to reject this welfare expansion. To preserve the safety net for the truly needy and protect taxpayers from the financial devastation of expansion, state leaders must continue to stand strong and hold the line against the Left’s misinformation.
Medicaid expansion enrollment and costs have soared to new heights
In 2000, there were roughly 35 million Medicaid enrollees nationwide—including nearly seven million able-bodied adults.7 Since then, Medicaid enrollment peaked at 100 million in 2023—a record high.8 Even worse, according to Centers for Medicare & Medicaid Services (CMS) more than 33 million able-bodied adults have been added to the Medicaid rolls in the last two and a half decades—a massive jump fueled by Medicaid expansion.9-10
When ObamaCare was signed into law and states were given the option to expand their Medicaid programs, state officials nationwide began estimating what the fiscal impact of expansion would be. These projections provided state lawmakers and voters with anticipated enrollment and what it would cost taxpayers.
For example, state officials originally estimated that only 6.5 million able-bodied adults could ever be expected to enroll through expansion.11 Third-party groups—such as the left-leaning Kaiser Family Foundation—also produced enrollment projections, claiming instead that expansion states could expect upward of 8.6 million able-bodied adults.12 Unsurprisingly, able-bodied adult enrollment has skyrocketed over the last decade, shattering projections. According to the most recent data from CMS, expansion enrollment skyrocketed to 23 million in 2023—more than tripling state estimates.13
These faulty enrollment projections have left taxpayers holding the bag for expansion costs that the so-called experts have attempted to minimize.
In 2023 alone, Medicaid expansion costs soared beyond $139 billion—nearly three times higher than the state-level estimates of roughly $50 million.14 Shockingly, that is just the tip of the iceberg. After nearly a decade, total Medicaid expansion costs have exploded beyond $1 trillion—$574 billion more than projected or more than double.15 States have been forced to carry at least $54 billion of these costs, despite advocates claiming that expansion would save money.16
These projections have consistently missed the mark and underestimated the true costs of expansion—which should serve as a stark warning for states still grappling with the decision.
In Wisconsin, Governor Tony Evers has claimed that only 89,700 able-bodied adults would be added to the Medicaid program if the state were to expand.17 However, based on the experiences of other states, the Foundation for Government Accountability estimates that 448,000 able-bodied adults could be expected to enroll—costing taxpayers nearly $30 billion over the next decade alone.18
Neighboring states can also serve as a cautionary tale, showing how explosive expansion enrollment can be. For example, in Illinois, state officials estimated that 342,000 able-bodied adults would ever be expected to enroll.19 But by May 2024, expansion enrollment was nearly 793,000.20 In Michigan, state leaders claimed that expansion enrollment would cap out at 477,000 able-bodied adults.21 But in October 2024, enrollment had already surpassed 713,000.22 Wisconsinites should be wary of the seemingly low projections made by the governor and other state officials. But there are other areas of concern worth noting, such as how expanding Medicaid would impact Wisconsin’s labor force.
Labor force participation rates have declined as Medicaid enrollment has skyrocketed
After steady growth for three-plus decades, the nationwide labor force participation rate reached an all-time high of 67.3 percent in 2000.23 Yet in the two and a half decades that followed, labor force participation rates steadily declined across the board.24
Today, the labor force participation rate sits at just 62.6 percent—roughly a seven percent decline and still lower than pre-pandemic levels.25 In fact, the current labor force participation rate closely resembles those of the 1970s—a time when many women were still not in the workforce.26 But as the nation has grappled with worker shortages and a diminishing labor force, Medicaid enrollment has trended in the opposite direction—growing by tens of millions and shattering records.
Rather than jumpstarting an economic comeback and restoring the workforce to previous highs, able-bodied adults on Medicaid are choosing to remain on the sidelines—with data from state Medicaid agencies showing most able-bodied adults do not work at all.27
Wisconsin’s current labor force participation rate is 65.9 percent—a decrease of more than 10 percent over the last two and a half decades.28-29 Meanwhile, even without full Medicaid expansion, the state’s Medicaid enrollment has skyrocketed during this time—growing to more than 1.3 million—an increase of 258 percent or nearly triple.30-31
According to Governor Evers, the Wisconsin labor force would be bolstered by expanding Medicaid, but the data do not support this claim.32 The Wisconsin Department of Health Services has stated that, historically, most able-bodied adults without dependents enrolled through BadgerCare Plus have not been employed.33
By expanding Medicaid, state officials in Wisconsin would be exacerbating an already rampant problem. Able-bodied adults made eligible for Medicaid through expansion are not subject to work requirements. While other welfare programs, like food stamps, give the state an option to include a work requirement, no such option is available to Wisconsin currently in the Medicaid program. Expansion would force the state into a policy position that the vast majority of Wisconsinites oppose: the lack of Medicaid work requirements. In 2023, voters in Wisconsin showed overwhelming support for commonsense work requirements, with roughly 80 percent of voters advising the legislature to include work requirements for able-bodied adults receiving benefits in the state.34
Since most expansion enrollees are not working, expanding Medicaid in Wisconsin would cause detrimental harm to the state’s declining labor force, not bolster it.35
Medicaid expansion has hurt hospitals
Expansion advocates have long touted Medicaid expansion as the silver bullet needed to save faltering hospitals. Unfortunately, this has not been the case. In many instances, hospitals and individuals with private coverage have been left far worse off in expansion states.
For example, millions of Americans have income levels that qualify them for free, or drastically reduced, private health insurance plans through the ObamaCare exchange.36 However, once a state expands Medicaid, individuals with incomes between 100 and 138 percent of the federal poverty level no longer qualify for these premium federal subsidies.37
In Wisconsin, there are more than 46,000 residents who currently qualify for premium subsidies on the exchange that would be forced onto Medicaid if the state chose to expand.38 This would be detrimental to state hospitals, as Medicaid reimburses providers at a much lower rate than private insurance. In Wisconsin, Medicaid only reimburses providers 51.9 percent of the cost for services provided compared to private coverage.39 All told, Wisconsin hospitals can expect to initially lose nearly $104 million from the crowd-out effect—with potentially more damaging losses on the horizon.40
Low Medicaid reimbursement rates coupled with increased enrollment would spell disaster for Wisconsin hospitals moving forward. Since 2013, the year before expansion’s implementation, hospitals in non-expansion states have seen their profits more than double.41 Meanwhile, hospitals in expansion states have had their profits slashed by nearly one-third.42
The reason for this shift in hospital finances is simple: As expansion states continue to see increased Medicaid enrollment, hospitals are billing Medicaid at a higher rate. Since Medicaid reimbursement rates are much lower than private coverage, hospitals in expansion states are seeing increased Medicaid shortfalls.
Indeed, Medicaid shortfalls in non-expansion states increased by only six percent from 2013 to 2021—compared to a 117 percent increase in expansion states, totaling more than $22 billion.43 If Wisconsin chose to expand Medicaid, the state’s Medicaid shortfall is estimated to surpass $1.8 billion—the equivalent of losing 14,114 hospital jobs.44
Rural hospitals are hit particularly hard by expansion. From 2014 to 2022, nearly 50 hospitals—including more than a dozen rural hospitals—closed their doors after Medicaid expansion was implemented.45 And in half of all states, one in four rural hospitals are at risk of closure.46
The experiences of expansion states not only show that expansion has not saved hospitals, but that it actually leaves them worse off. Wisconsin would be wise to read the writing on the wall and learn from its neighbors by continuing to reject Medicaid expansion.
The Bottom Line: Wisconsin should continue to reject the false promises of Medicaid expansion.
Being lured by the false promises peddled by welfare expansion advocates, 40 states have succumbed to the pressure and expanded their Medicaid programs—and the results that followed have been disastrous.47 Enrollment has shattered projections, spending has reached new heights, labor force participation rates have plummeted, and hospitals have seen their financial position made even worse.
To avoid the same fate, Wisconsin should continue to remain steadfast in its opposition to Medicaid expansion to able-bodied adults.
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