Spending more to cover less — fiscal responsibility in Utah edition

Utah’s governor just signed into law a limited Medicaid expansion that the legislature passed over the past ten days. The new law overturns the full expansion that voters approved in November.

 

Utah’s voter-approved Medicaid expansion initiative was replaced Monday with a program that is more restrictive, initially more costly, and contingent on a series of uncertain federal concessions.

Utah lawmakers and Gov. Gary Herbert, though, say the bill is more economically sound over the long term.

Senators voted 22-7 to adopt the House version of SB96, which launches a partial medicaid expansion April 1 and would revert to full expansion only in the event that federal administrators reject multiple requests for Affordable Care Act waivers.

Over the short term, this bill will cost Utah more money.  The Affordable Care Act provides for a 90% long term federal match (and a 93% match in 2019) for full expansion of Medicaid to 138% of the Federal Poverty Level (FPL).  Partial expansions to 100% FPL don’t qualify for that full match.  Instead, the feds will pay the standard match, which in the case of Utah is 68% of the incremental costs.  Utah will be on the hook for 32% of the costs of a smaller population.

Utah thinks that they will get a waiver from the Center for Medicare and Medicaid Services (CMS).  This waiver will contain the now “typical” work requirements but also two new major elements:  A cost control cap with an associated enrollment cap and the full ACA enhanced matching rate.  Those two elements have never been approved before.

Adrianna McIntyre, Allen Joseph and Nicholas Bagley reviewed partial expansion logic in the New England Journal of Medicine in the summer of 2017.  They noted the financing mechanics and incentives for states to avoid the 100-138% FPL population in the Medicaid pool:

 

Why were states interested in these partial expansions? Starting in 2020, states are responsible for covering 10% of the costs associated with the Medicaid expansion. Because of a drafting mistake, however, the ACA says that the 100-to-138 population can receive subsidies to purchase a private health plan on the exchanges — but only if they are ineligible for Medicaid.3 For those people, the federal government bears the entire cost of subsidizing private coverage, with no contribution from the states. As a result, the states save money for every beneficiary whom they can move from Medicaid into their exchanges…

On the practical side, many states would probably demand similar waivers. Unlike the federal government, states are obliged under their constitutions to balance their budgets every year. They will welcome the chance to reduce Medicaid obligations and alleviate budgetary strain. Hospitals, physicians, and other providers will probably support partial expansion because private insurers pay them better than Medicaid does.

Partial expansion would not just shift a financial burden to the federal government; it could also increase the size of that burden. Arkansas’s decision to enroll beneficiaries in private plans increased expansion costs by 24%; in other states, the disparity between Medicaid and private costs could be much higher. Between premium subsidies and supplemental cost-sharing reductions, the federal government will probably shoulder more than 90% of the price tag for this costlier coverage, with beneficiaries picking up the difference….

CMS has denied a partial expansion for Arkansas.  CMS has also never offered to pay the enhanced ACA rate for BadgerCare in Wisconsin.  BadgerCare is a waiver program that extends Medicaid to Wisconsin residents who earn up  to 100% FPL.

Utah’s new law is betting that CMS will establish precedent that transfers large costs back to the federal government and dramatically increase the likelihood that several more non-Expansion states will expand.  The first assumption is a hard assumption under any administration.  The second assumption is a difficult assumption under this administration.  If the enhanced match rate is not authorized, Utah will default back to a full expansion after a little more than a year.

UPDATE 1: Adrianna McIntyre and I have a new piece at Health Affairs Blog that look into the policy implications.  We build off of her framework from NEJM and incorporate silver loading effects.

 






20 replies
  1. 1
    But her emails!!! says:

    Why did they bother with this shit? The voters passed the expansion, why not just go with it?

  2. 2
    Vhh says:

    But that 1 year of sticking it to the poors gets the wingers thru the next election.

  3. 3
    Duane says:

    @But her emails!!!: The will of the voter’s. Ha! Knife, meet nose.

  4. 4
    OzarkHillbilly says:

    So much for Democracy. And intelligence.

  5. 5
    Anonymous At Work says:

    Pretty sure the Democratic appointee running CMS in 2022 will deny the requested waiver once all the court cases have been settled. And that’s assuming a fast-tracking, no-trial/discovery path to the Supreme Court.

  6. 6
    Amir Khalid says:

    @But her emails!!!:
    I guess they wanted to punish the voters for disobedience.

  7. 7
    Tom Levenson says:

    I don’t think that change comes quickly. But I do think that shit like this shaves away at even near monolithic redness in red states. Utah ain’t going D at a national level any time soon. But this may energize Ds at local levels, and that can bring about some surprising results over time. See, e.g., Kansas.

    Anyone know anything about Utah Democrats? Anyone to help?

  8. 8
    trollhattan says:

    “I’m having so much fun hitting myself.”

    –Evidently, the average Utah voter

  9. 9
    Yarrow says:

    @Tom Levenson: Soonergrunt is in Utah, I think. Maybe check with him?

  10. 10
    Anonymous At Work says:

    @Tom Levenson: Not just “red” states but any states that elect Republicans at the local/state levels. Florida in 2016 passed expanded marijuana ballot initiative and voted for a President who hippy-punches and a legislature that was 100% opposed to the same ballot initiative. Arkansas in 2018 did the exact same.
    The cognitive dissonance between ballot items is impressive among Republicans in all states.

  11. 11
    Kent says:

    I really don’t understand the political rationale for this sort of idiocy. Obama is long gone. Medicaid is an established program. What is the political gain for making the program more expensive and worse? I guess it is just the lizard-brain arsonist impulse. But I really don’t understand the efforts they go to to make things worse.

    On the plus side, all it can do is further soil their brand with the remaining moderate and independent types in UT who just want a functioning government and don’t care about all the partisan signaling.

  12. 12

    @Kent: To be cynical, I think this is an attempt to say “We did everything we could and those assholes in DC made us take the full expansion….”

  13. 13
    swiftfox says:

    I haven’t lived there since 1999. This is the state that voted out their D congresscritter in 1996 because of the Grand Staircase/Escalante wilderness created out of BLM land but retained by BLM and not given to the NPS as per usual so they could keep on grazing. And it still was not good enough. Plus a state legislator made a state park take down a sign explaining how cattle destroy riparian areas. Such is Utah.

  14. 14
    rikyrah says:

    Complete assholes for doing this. The voters passed it😠😠😠

  15. 15
    Redshift says:

    @Kent: Medicaid is established, but Republican state governments bitch endlessly about its costs, always whining they’re “exploding” but never dropping out of it. I take that to mean they know it’s worth every penny, but it’s useful as “isn’t it terrible your money is going to the poors” signaling.

    That’s the way the Utah GOPers have couched this, saying it will cost more in the short term but keep costs down in the long run. Of course, they’re hiding the fact that it keeps costs down by covering fewer people.

  16. 16
    Redshift says:

    I thought I had read earlier articles that said the entire expansion would die if they didn’t get their waivers that seem designed to fail. Either I misread or the reporters misunderstood, but if it reverts to full expansion in that case, that’s less bad.

  17. 17
    Mart says:

    Post is a pretty good advertisement for Medicare for all, what with private plans costing 24% more than Medicaid expansion.

  18. 18
    StringOnAStick says:

    Utah is dominated by one religious group that definitely has the whole bootstraps thing as part of it’s group mythology, so poor bootstrapping is obviously a character flaw that should be punished and definitely not enabled in any way. Then again, Salt Lake City houses all it’s homeless because they ran the numbers and discovered in was cheaper than the services that had to offer when they weren’t housed, though that city is the one blue dot in a sea of desert red.

  19. 19
    Seanly says:

    Idaho is trying to do the same thing. State Supreme Court upheld the ballot measure to expand Medicare. Now that they have to expand it, the state legislature will do all in its power to water it down & make it more expensive for the state.

  20. 20
    mere mortal says:

    …which launches a partial medicaid expansion April 1

    Really? Isn’t that just a bit too on-the-nose?

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