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With Utah Medicaid waivers in holding pattern, advocates decry expansion delay, added costs

Utah Health Policy Project says extra $6.6 million spent each month; state pegs it at $2.5 million.

Lawmakers and advocates’ opinions differ on how much partially expanded Medicaid is costing the state — and what should be done after the federal government informally denied enhanced funds two months ago. Matt Gade, Deseret News Archives

SALT LAKE CITY — Lawmakers and advocates’ opinions differ on how much partially expanded Medicaid is costing the state — and what should be done after the federal government informally denied enhanced funds two months ago.

Advocates of a full Medicaid expansion in Utah say the state is losing $6.6 million more a month by partially expanding the program. The Utah Health Policy Project got that number from a recent report by Families USA, which claims to have examined Utah’s current enrollment and trend projections.

“I’ve been saying this for a long time, but the Legislature keeps coming to us and asking us for cost controls for the Medicaid program. The cost control for the Medicaid program right now in Utah is to expand Medicaid. That is how you control this excess of money we’re paying to cover less people,” Courtney Bullard, Utah Health Policy Project education and collaborations director, said during a meeting this week with the Deseret News editorial board.

The Utah Department of Health disputes the $6.6 million figure, saying the state is paying $2.5 million more every month than it would under a full expansion.

Tom Hudachko, spokesman for the department, said the state’s $2.5 million number was reached by multiplying enrollment numbers with cost estimates, and determining what Utah is paying under the current scenario compared to what it would pay under an increased federal funding scenario.

Utah covers people who earn up to 100% of the federal poverty level, whereas full expansion would cover individuals and families up to 138% of the federal poverty level. Under the partial expansion, Utah pays 30% and the federal government provides a 70% match. Under full expansion, the federal government covers 90% of costs.

About 35,000 people have signed up for Medicaid under the expansion, but about 24,000 of them were already receiving help and “the state simply went in and transferred them” into Medicaid from other programs, said Sen. Allen Christensen, R-North Ogden, sponsor of expansion bill SB96. The bill was passed during this year’s legislative session in response to the voter-approved Proposition 3 establishing a full expansion of Medicaid under the Affordable Care Act. Lawmakers had said that would be too expensive for the state and created a more-limited program.

The lack of clarity over what’s next began in July, when the Centers for Medicare and Medicaid Services announced that the White House would reject partial funding requests in Utah and other states that were allowing fewer people to be enrolled than required by the Affordable Care Act. Fully funding them “would invite continued reliance on a broken and unsustainable Obamacare system,” the centers said.

But Utah hasn’t received a formal rejection yet.

The Utah Health Policy Project will meet with Gov. Gary Herbert’s policy director next week to urge the governor to submit a state plan amendment fully expanding the program. The group believes such an amendment would allow the Centers for Medicare and Medicaid Services to approve an enhanced federal contribution of 90%.

However, legislators say the bill doesn’t allow the governor to make such a change.

“He can’t go around the law,” Christensen said.

The health department has the same interpretation of the law, Hudachko said.

“In order to get to the next step, you have to have an answer on the previous step. So in order for us to get to the next step of full expansion with a state plan amendment, it says that we have to have, essentially, been denied on our previous step or haven’t heard on our previous step by March 15 of next year,” according to Hudachko.

Rep. Jim Dunnigan, R-Taylorsville, also said the Families USA numbers aren’t an accurate reflection of what Utah is actually spending, and that it overestimates the cost of the program.

He said the report also appears to only tell half the story. If Medicaid gets fully expanded to those with incomes between 100% and 138% of the poverty level, 41,000 Utahns who are now in the federal marketplace would join the program, whereas now, they’re getting federal subsidies.

“If the federal government paying 90% of the cost is good, then having them paying 100% of the cost is even better,” he said.

According to the state’s fiscal analyst, when those 41,000 people join the program, Utah’s yearly share will be $35 million, or about $3 million a month, Dunnigan said.

He said the state passed a law several years ago that said any Medicaid expansion, including a state plan amendment, needs to first be approved by the Legislature, which he told Utah Health Policy Project.

“The governor cannot do it. Whether or not he would, that’s up to him. But he could not legally do it,” Dunnigan said.

According to SB96, the state has to work through a couple of options before Medicaid would be fully expanded. If those proposals are not approved by U.S. Centers for Medicare and Medicaid Services by July 1, 2020, the health department must then institute full expansion in Utah.

For now, lawmakers remain in a holding pattern waiting for an official approval or rejection on waivers for its partial expansion plan.

“We have the law in place, and the federal government did not come through with what they have been telling us. Therefore, we get stuck in this position until we can get together and change the Medicaid expansion. Then we are going to be having to pay this extra money out. We have passed the law, it is the law, and we can’t change it until we get together as a body again,” Christensen said.

But advocates of full expansion say that’s not soon enough.

“So we’re living in phase 1 is enrolling, phase 2 is pending, and phase 3, the state is currently drafting. So that’s the fallback plan that has the full Medicaid expansion up to 138% of the poverty line, with the 90-10 federal match. And then the rest of it is a bunch of question marks right this minute,” said Stacy Sanford, health policy analyst for the Utah Health Policy Project.

“While we’re living in this phase 1, it’s costing the state quite a bit more money,” she said.

“When I heard $2 1/2 million, I thought, ‘That’s so low. That isn’t even half of how much we’re paying extra.’ I don’t know where that number came from, but we took the state’s numbers, which we’ve always done,” Bullard said. She said Families USA then “checked math” on the numbers.

Bullard said they concluded that if the state gets the 90-10 federal match under a full expansion, it will pay $1 million less per month “even considering those 60,000 extra people that we’d be covering.”

When asked what her thoughts are on other states with fully expanded Medicaid that have ran into cost troubles, Bullard said, “it’s no tale, it’s no story, that health care costs are increasing. But you have to think about health care for the Medicaid population as an investment into that population. And it is an investment. So for every dollar you’re spending into the Medicaid program, there is a return on that.”

She said people who receive medical care often end up being able to enter the workforce. Utah’s “population health” also can’t be compared to those of other states.

If the state should get approval for its work requirement proposal, as well as a requirement that people take advantage of work-sponsored insurance programs wherever offered, the next phase of expansion can be implemented, increasing the number of eligible enrollees. But, if it doesn’t get federal approval, the “fallback plan” would go into effect.

The fallback plan would expand Medicaid to 138% of the poverty level but would include a self-sufficiency requirement, and require enrollment in an employer’s plan with premium reimbursement when offered. It will be implemented if the state’s waivers under the limited, per-capita cap plan are rejected by January 2020.

Then, if the fallback plan is rejected by July 2020, a full Medicaid expansion under the Affordable Care Act would be implemented.

In the meantime, Dunnigan and Christensen agreed, the state is still paying a lot of money and is poised to continue spending in the future.

“It’s still something. It’s $2.5 million, but it’s certainly not $6.5 million,” Dunnigan said.

According to Christensen, “The public, the general public, I think, were deceived by Medicaid expansion. They said, ‘We’re going to give all these people, and all it’s gonna cost you is this little tax increase.’ And that was wrong.”