It is unclear what the full impact of the “One Big Beautiful Bill” will have on Wisconsin’s Medicaid program, partly because the federal government has yet to detail some of the implementation requirements, according to the Legislative Fiscal Bureau.
The nonpartisan agency also noted in a memo this week that the reconciliation bill will likely over time reduce the amount of money Wisconsin sends to hospitals as part of a move in the state budget designed to boost those payments.
LFB this week wrote a memo outlining how the legislation impacts Wisconsin’s Medicaid program as well as FoodShare.
The agency noted it’s hard to gauge what some of the changes will mean until the federal government provides more guidance.
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For example, the state now has 184,000 childless adult enrollees in Medicaid. Starting Jan. 1, 2027, those enrollees will need to meet new work requirements that include a minimum of 80 hours per month of paid work or qualifying activities such as school or an employment training program.
The reconciliation bill allows states to obtain an exemption. Without one, LFB expects the new requirement to reduce enrollment of childless adults beginning in the last six months of the 2025-27 biennium either due to the complexity of the application process or because some who meet the work requirements will see their earnings increase above the threshold to qualify for the program.
“However, since the impacts of these provisions will depend upon federal guidance and administrative rules, the magnitude of the program disenrollment, and associated reduction in MA benefits costs, is uncertain,” the agency wrote.
Meanwhile, the reconciliation bill also could reduce some of the increased payments hospitals are set to receive under a provision in the state budget. That provision increased the state’s assessment on net patient revenues to 6%, up from 1.8%. That money will then be used to attract additional matching federal dollars.
In all, the effort will mean a net increase of $918.8 million a year over the 2025-27 biennium for hospitals.
Still, LFB noted the federal bill also includes new restrictions on what the state can pay hospitals for Medicare services that kick in starting in 2028. For states like Wisconsin that haven’t adopted a full expansion of Medicaid under the Affordable Care Act, the cap is set at 110% of the Medicare rate.
LFB wrote it is likely Wisconsin will exceed that cap of 110% with the implementation of the higher payments to hospitals. The memo didn’t calculate how much Wisconsin may exceed that limit. But if the state has to reduce payments to hospitals starting in 2028, it would mean less federal matching funds. That would reduce the payments to hospitals, as well as the share of that federal money the state is keeping to cover other health care costs.
In the FoodShare program, the state is expected to pay an additional $51 million in administrative costs starting in fiscal year 2026-27.
The reconciliation bill requires states with an error rate in the program of 6% or more to contribute at least 5% of costs for the food stamps program. According to the memo, Wisconsin’s error rate was 4.47% in federal fiscal year 2023-24.
