Wisconsin still losing out from not expanding Medicaid — even under Trump’s big bill

For over a decade, Wisconsin has heard the same message from Republicans regarding full Medicaid expansion: Accepting 90% federal reimbursement to cover more low-income people will only set Wisconsin up for failure if the federal government abandons its part of the deal. 

At first glance, President Donald Trump’s recently signed big bill appears to validate that argument. The 40 states that have fully expanded are now expected to lose billions of dollars in federal aid while getting tagged with additional administrative costs to create work requirements and eligibility assessments required in the bill. 

But it turns out Wisconsin is still going to be subject to the new federal mandates without the higher federal reimbursement rate that expansion states will continue to receive. In other words, at a time when the Republican-controlled federal government is supposedly pulling out the rug from expansion states, Wisconsin is still left holding the bag.

A look back

Back in 2014, then-Gov. Scott Walker and Wisconsin Republicans made the controversial decision not to accept full Medicaid expansion.

At the time, Walker explained his goal “is to get more people out into the workplace, more people covered when it comes to health care and fewer people dependent on the government, not because we’ve kicked them out, but we’ve empowered them to take control of their own destiny.”

But he also argued that the federal government would eventually pull back on its commitment to fund Medicaid at 90%.

“That commitment is not going to be there and taxpayers all across America will be on the hook,” Walker said. “They are not going to be on the hook in Wisconsin.”

At the time, Wisconsin was one of 25 states not accepting expansion. Now, the state is one of the 10 remaining holdouts, with most of the others in the deep red South. Even reliably red states, like Arkansas and Louisiana, have accepted full expansion. 

Instead of accepting full expansion, Wisconsin chose to cover individuals through BadgerCare, the state’s Medicaid-supported health insurance program for low-income residents set up by former Gov. Tommy Thompson, a Republican. 

Walker and Republicans lowered Medicaid coverage to 100% of the federal poverty line from the previous 200% and eliminated the waiting list for childless adults. Those above the poverty line without employer-sponsored insurance could purchase it through the Affordable Care Act marketplace using federal subsidies, according to the Wisconsin Policy Forum.  

But Wisconsin taxpayers are paying more to cover individuals below the poverty line: 39.3% of costs rather than 10% under full Medicaid expansion. In 2023, Medicaid accounted for 15.7% of state taxpayer spending, according to the policy forum.

Under its approach, Wisconsin doesn’t have an eligibility gap like some states, something Republicans highlight as a reason the state doesn’t need to expand.

But that has come with a loss of federal funds. Over the past decade, Wisconsin’s Department of Health Services estimates, the state has spent about $2.6 billion more to cover the costs of a partial expansion compared with the projected cost under a federal expansion.

Under an expansion, more individuals would be able to access Medicaid. But the Wisconsin Policy Forum found it would have a somewhat modest impact on coverage levels — the percentage change in Medicaid enrollees would be 7.2%, compared with nearly 30% or more in other non-expansion states. 

Work requirements still in effect under Trump bill

With the recent federal bill, Walker and other Republicans still argue Wisconsin was right not to accept federal expansion. The state is going to experience the impacts to a lesser extent than fully expanded states. 

But because Wisconsin receives federal waivers for its Medicaid program, the state is still subject to some provisions under the new law, including the work requirements, eligibility determinations and provider taxes.

Under the new work requirements, individuals covered by Medicaid are required to prove they are working 80 hours per month — parents with dependent children or people who are medically frail are exempted.

As a result, some 230,000 Wisconsin residents could lose coverage while the state incurs administrative costs to account for the new requirements, according to an estimate from U.S. Senate Democrats based on data from the Congressional Budget Office.

The work requirements don’t stop at individuals covered by Medicaid alone; it also extends to coverage through marketplace subsidies, affecting over 200,000 Wisconsin residents. 

Work requirements used to be required for Wisconsin residents to access coverage through federal waivers, but in 2021 then-President Joe Biden removed the work requirement. 

The labor force participation rate has dipped from about 68% in 2017 to a little over 65% as of May 2025 but has remained higher than the national average, which is about 62%. Some reports suggest that decline is due to the aging workforce in the state.

Work requirements have also been found to increase the uninsured rate.  

The Wisconsin Policy Forum reports that one of the main reasons work requirements may lead to higher uninsured rates is that they are confusing and time-consuming. Some people may choose to get rid of coverage altogether to avoid unnecessary paperwork. 

What could happen with the federal bill?

The Kaiser Family Foundation also found that implementing work requirements will be costly for states, costing anywhere from $10 million to over $270 million, depending on the size of the state. DHS estimates the state will pay $6 million annually to implement work requirements, while receiving a lower federal match rate than fully expanded states to reimburse for administrative costs.

With a lower federal match rate, Wisconsin has increased Medicaid funding through hospital taxes, which the new state budget just increased from 1.8% to the federal maximum of 6% for the 2025-27 biennium budget.

Republican lawmakers in the state were quick to approve the hospital tax increase, despite their previous opposition to Medicaid expansion as a means for drawing down additional federal funding. If they hadn’t, the state’s 1.8% tax would have been frozen under Trump’s big bill. The increase will raise some $1 billion more annually in federal matching funds that the state can use to pay hospitals for care they provide Medicaid patients.

States that expanded will not lose the 90% federal match rate, but those like Wisconsin that didn’t will now miss out on an additional incentive to expand created during the Biden administration.

The incentive would have raised the federal match rate to 95% for two years, but was eliminated by Trump’s big bill. Instead Wisconsin will remain at about 60% reimbursement, while still facing the same bureaucratic requirements as expansion states.

This article first appeared on Wisconsin Watch and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.