Citing several million dollars in cost overruns, the Department of Health Services froze enrollment for the BadgerCare Basic program Friday. Nine months after the first individual was enrolled in Basic, expenditures are outpacing premium revenues by nearly $2 million.
"It is unfortunate that we need to take this step," said DHS Secretary Dennis G. Smith. "We will maintain coverage for those currently on the program and help new applicants find alternative coverage.
"BadgerCare Basic was never intended to be funded with state taxpayer dollars," he said. "Unfortunately, the design of the program and the decisions made by the previous administration were unsustainable. In order to prevent a cost shift to the state taxpayers we must suspend enrollment and increase premiums."
Through February of 2011, the Basic program has taken in $4.18 million in premium revenue and paid out $5.83 million in claims. In addition, more than $1 million in federal grant funding that was intended to be used as a "cushion" has been completely expended. Not factored into these numbers is the fact that claims often lag for up to three months, meaning the program is likely in even worse fiscal position than the numbers show. In fact, DHS estimates that once all the claims are submitted, BadgerCare Basic may have already accrued a deficit in the range of $5.7 million.
"From the very beginning there have been doubts about the sustainability of this health plan. Unfortunately, it appears those doubts were well founded," said Smith. "The Basic program is a prime example of good intentions that created unrealistic expectations - but it isn't the only example."
ADVERTISEMENT
Changes to premiums will be communicated to enrollees in advance of increases taking effect. DHS anticipates making a final determination on premium increases in the coming months. The BadgerCare Basic program is a self-funded health care program for adults without dependent children who were unable to enroll in BadgerCare Core.
