Wisconsin Gov. Scott Walker says an alternative to state employee health and pension changes is bumping 200,000 children out of Medicaid

Wisconsin Gov. Scott Walker has rocked the state Capitol with a host of proposals that would affect state employees, including requiring them to pay more toward their pensions and health care.

Those two moves, part of a budget repair bill introduced Feb. 14, 2011, would raise nearly $30 million. The Republican-controlled Legislature has the measure on the fastest of tracks, and could approve it in under a week.

Raising $30 million would be a big step toward meeting a $137 million budget shortfall before the 2010-2011 budget year ends June 30, 2011 -- and help reduce a larger gap in the next two-year budget.

In pitching his proposal for the higher pension and health care payments at a Feb. 11, 2011, news conference, Walker presented a stark picture of the options he has:

"The alternative in this budget alone, in fiscal year 2011, is to look at 1,500 layoffs of state employees or close to 200,000 children who would be bumped off Medicaid-related programs."

As governor, Walker certainly has the power to lay off state workers.

But can he remove children from Medicaid, the state-federal program that pays medical bills for low-income individuals and families?

To back up the statement, Walker spokesman Cullen Werwie provided a Feb. 8 memo from the state Department of Health Services. It says spending $30 million over three months provides BadgerCare, a Medicaid program, to 194,539 Wisconsin children.  

That supports the numbers. But the memo says nothing about whether the state has the authority to cut kids from the Medicaid program.

We asked Walker directly whether the state has such power.

"Well, that’s what the equivalent would be," the governor replied. "That’s just one option. The more immediate one -- if I had to, I don’t want to do any of them -- would be the 1,500 layoffs. But that’s what the equivalent cost is."

OK, we understand that removing nearly 200,000 kids from Medicaid would save $30 million over three months, but could the state do that?

"Again, we just picked out numbers in terms of equivalent dollar amounts," Walker said. "I literally did not even go through the mechanics of that because I’m planning on doing what’s in this bill, not the alternatives."  

We looked at the mechanics by consulting several experts:

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• Jon Peacock, research director of the Wisconsin Council on Children and Families

• Joan Alker, co-executive director of Georgetown University’s Center for Children and Families

• Kaiser Family Foundation, a national research organization that focuses on health care (memo)

• The Wisconsin Legislative Fiscal Bureau’s memo on Walker’s budget-repair bill

They all agreed: The federal health care reform law that took effect in March 2010 prohibits states, until at least 2019, from changing their Medicaid eligibility requirements for children.

In other words, states can’t take Medicaid away from kids who are receiving it.

In fact, if a state did cut kids, it would forgo all federal Medicaid funding, according to a Center for Children and Families memo. That would be significant, as Wisconsin  spent $6.7 billion last year in federal and state money on Medicaid for children and adults.

"I think when you’re discussing how to balance your (budget) choices that you ought to make comparisons of actual options," Peacock said.

Let’s review.

Walker said that if his proposal for state employees to pay more for their benefits is not adopted, alternatives such as removing nearly 200,000 children from Medicaid would have to be considered. But that’s a phony alternative. Legally, the state does not have the option to remove kids from Medicaid; Walker acknowledged he did not check before making the statement.

We rate Walker’s statement on Medicaid and kids False.