Utah recently passed an expansion of Legacy Medicaid. This is an improvement for the lives of the 16,000 people who are projected to receive coverage. But it is also an illustration of the cost of spite.
Deseret News has the details:
Gov. Gary Herbert told reporters that he would sign HB437 (sponsored by Rep. Jim Dunnigan, R-Taylorsville), which would extend Medicaid coverage to Utahns who have the greatest need…
Bill details are in this story:
A bill backed by Republican House leaders extending Medicaid coverage to Utahns in the “greatest need” because of homelessness, run-ins with the law, substance abuse or mental health issues won committee approval Monday.
“We have the opportunity to improve the lives of 16,000…
Gov. Gary Herbert saw his Healthy Utah plan to use the hundreds of millions of dollars available under Obamacare to cover all of the estimated 110,000 Utahns eligible for Medicaid expansion pass the Senate but fail in the House last session….
The cost to the state is about $30 million, he said, with the federal government paying about $70 million. He said Utah hospitals will pick up 45 percent of the state’s share, some $13.5 million.
Spite is expensive.
There are approximately 110,000 people in Utah who qualify based on income for Medicaid expansion (thank you very much Chief Justice Roberts). In the current calendar year, the Federal government will pay 100% of the cost of covering those individuals via Medicaid Expansion. In CY 2017, the feds will pay 95% of the cost, then 94% in 2018, 93% in 2019 and 90% in 2020 and over the long term. A Legacy Medicaid expansion which this is means the Federal government is picking up 70% of the cost from the first day of the program start to the last day of the program. Utah will need to come up with the other 30%.
In 2016, complete Expansion means the state is paying on net, nothing to cover 110,000 people. Under this legacy expansion, the state is paying $30 million to cover 15% of the eligible population. In 2017, the state will actually have to kick some money in. However, it will be less than then the $30 million obligated as the current program is skimming individuals who are highly likely to be high cost individuals. The uncovered population will tend to be healthy and cheap. By 2020, the state may be spending slightly more to cover the entire population that is eligible rather than the small subset of the population that they want to cover.
However, expansion at that point will be bringing in massive net federal cash flows that show result in higher state tax revenue so a dynamic analysis will probably show that expanding a subset program under Legacy Medicaid match rates versus a full expansion is still close to a net wash from the state finance perspective. At most, covering the entire population at the enhanced federal reimbursement rate is a pittance more than covering an expensive subset at the regular Legacy Medicaid federal match rate.
Spite is expensive.
Mister Papercut
But it’s Freedom Spite. ™ There’s no sum of money too great to spend in the service of saving us from teh creeping Soshalisms.
OzarkHillbilly
Mmmm, mmmm, mmmm, can’t you just taste the contempt?
MomSense
Spite is why we can’t have nice things.
Wag
I love the physical beauty of Utah, but the mean soul of the state leadership makes it really difficult to feel good about visiting.
Soapdish
The federal government shouldn’t give Utah jack shit until Lee lifts his hold on the aid to Flint, MI.
pseudonymous in nc
I’d like to see a list of healthcare policy decisions that can be filed under “cost more because they try to be picky about covering the ‘right’ people (or not covering the ‘wrong’ people).” Spite and moral grandstanding can be expensive, but it’s something people are willing to pay for — see also, drug testing of welfare recipients, various prison things.
Patricia Kayden
Given that we are talking about healthcare, spite is not only expensive but also dangerous to people’s heath. Glad to see that the Utah Governor has done something good for his people despite having to fall within the Dreaded Kenyan’s healthcare system.
Just One More Canuck
@Soapdish: Unfortunately, Lee would probably be ok with that
Chip Daniels
This is a point that I have come to, the realization that conservatives actually like wealth redistribution, they just object to certain recipients.
This why it always seems to come back to race, because it is never really about economics, fiscal policy or anything ekse. It’s always first a question of who is to benefit, and if those people are deserving.
OzarkHillbilly
@Just One More Canuck: Hopefully his constituents wouldn’t and will remember when he comes up for re-election.
gene108
@Chip Daniels:
Utah is one of the whitest states in the nation. I think the definition of undeserving poor people probably includes some subset of white peoples.
Anya
Richard, thank you for keeping us always informed on the ACA. Whenever I am here, I always read your post. I just don’t comment on it because I am ill-informed on the topic.
Anyway, I’ve been arguing on Twitter with few of my followers (t.v. shows are our shared interest) who are very anti-Obamacare. They always have an anecdote about how premiums went up, or how a cousin, a colleague or a neighbor got their healthcare coverage increase astronomically since Obamacare was implemented. My question to you is can you direct me to one of your posts that addresses these issues. Also, if at all is possible, can you make a cheat-sheet of sort that might help those of us engaged in social media flame wars to address some of the frequent lies or myths about the ACA.
gene108
@OzarkHillbilly:
Didn’t Lee beat out the incumbent Bennett, in the Utah primary, because Bennett “compromised” with Democrats over something, somethimg?
Basically Utah Republicans want to burn it all down.
kc
What the heck is a “Legacy expansion?”
Thoroughly Pizzled
@Anya: In the case of premiums, they probably would have went up by more without the ACA. That’s not a very comforting argument, though.
Richard Mayhew
@kc: Medicaid at this time has two different programs.
The first is the legacy program which is funded on a split basis between the state and the Feds. This part of the progam is healthcare for the “deserving” poor — the disabled, poor kids, pregnant women. States have to cover those populations. They can elect to cover other populations with Medicaid money. Those groups are “voluntary” assistance categories. There are asset tests and significant barriers to access. This is legacy Medicaid.
PPACA created a new category of eligiblity where the only qualification was citizenship/permanent residence plus income under 138% FPL. this is Medicaid Expansion.
What Utah did was say it wanted to expand coverage to a voluntary assistance category and pay 30% of the costs and have the Feds pick up 70% of the costs instead of expanding Medicaid to everyone under 138% FPL (which will be most of the people covered under the limited expansion) and have the Feds pick up 100% of the costs.
Cermet
Got to give it to Gov. Gary Herbert – he tried to do the right thing and when defeated, at least did all he could to help those most in need. The man is decent.
boatboy_srq
@Chip Daniels: That rings all too true. We should be thankful that “separation of church and state” persists as it does; otherwise the “wrong” sort of person could be broadened to include more faiths they disapprove of beyond Islam. Imagine if Utah sanctioned all non-Mormons, or Alabama all non-Southern-Baptists: the US has a way to go before falling into that quagmire, but these people can see that point from where they are and to them it looks remarkably like Paradise.
boatboy_srq
However, no doubt someone will, in a few years’ time, look at Utah’s numbers and declare the entire Medicaid expansion prohibitively expensive because Utah tried it and it cost them all that money – conveniently ignoring the Utah solution is the least effective and most costly alternative to the federal program. They’ll extrapolate numbers based on Utah’s current program rather than the federal alternative the state refused because Fvck the Kenyan IslamoFascoSoshulist Usurper So There Pbbbbt.
Karen
I’m dense when it comes to these things but where does spite factor in? It looks like the Rep. governor wants to cover the neediest. What am I missing?
Ruckus
@Karen:
For basically the same money the state could cover dramatically more people if they just took the normal Medicaid expansion, rather than the Legacy program. Legacy is what everyone had, only the neediest get any coverage, while Medicaid expansion gets subsidies for most everyone in need, IOW a lot more people end up with coverage.
Richard Mayhew
@Karen: It is cheaper in 2016 to expand Medicaid for everyone eligible than using state money to cover 15% of the eligible population. That is spite
Ruckus
@Richard Mayhew:
Given the numbers in Utah’s case would the cost be significantly different in 3 yrs when they actually do have to pay some towards full expansion?
Richard Mayhew
@Ruckus: Most likely not. There are some serious assumptions in my logic.
a) The Legacy Expansion population being covered (homeless, individuals with significant mental/behavioral health concerns etc) are more expensive on average than the people who are Medicaid Expansion eligible but are not in this limited expansion.
The limited expansion population has a cost of $550 Per member per month (100 million year/16000 people/12 months). Actual PMPM will be a touch higher as average length of stay on the expansion will be less than 12 months every year.
b) The non-legacy expansion but eligible population is fairly cheap. 2011 Data is old, but Utah had a PMPM of $240 for non-disabled, non-aged adults. Throw in a 5% medical inflation trend $300 PMPM for 2016.
http://kff.org/medicaid/state-indicator/medicaid-spending-per-enrollee/
c) A portion of the Utah adult non-aged/non-disabled adult population is pregnant women (currently qualifies at income of under 139 FPL) Pregnant women are expensive so they bump up the PMPM. Pregnant women would be a net cost savings for Utah as they shift from high state match share to PPACA no and then low state cost share groupings.
https://www.healthinsurance.org/utah-medicaid/
d) Assuming pregnancy is not a risk factor for the excluded population, their actual PMPM is probably under $250 a month (professional judgement).
e) 30% of $550 is $165 per legacy expansion individual in state funds. 10% of $250 a month is $25 per covered individual in state funds. That is a rate of 6.6:1
16,000:110,000 is 6.875:1
F) That is pretty damn close to a breakeven proposition even if you tweak the PMPM’s a bit
G) I am not looking at any other program eligibility shifts of individuals currently in 70% Fed Match Medicaid to 100% step down to 90% Fed Match Medicaid Expansion programs (for example pregnant women over 100% FPL)
H) I am neglecting any regional import model multipliers and tax revenue as this will be a boat load of new spending coming into the state counter-acting money leaving the state under current tax law
I) For a quick back of the envelope long term costs of full expansion is slightly more expensive than the long term costs of this partial expansion using assumptions that are not particularly favorable to expansion.
RaflW
Spite is expensive. And potentially deadly.
There is that, too.
kc
@Richard Mayhew:
Thanks!