Late last week, the Washington Post reported that federal government won’t pay the enhanced 90% ACA Medicaid expansion match rate to any state that does not expand Medicaid to 138% Federal Poverty Level (FPL).
The Trump administration will not give Utah or other states generous federal funding to partially expand their Medicaid programs under the Affordable Care Act, funding that Utah hoped to receive after the administration earlier this year authorized the state to move forward on an expansion of the government health insurance program
This is important as Utah was about to file a waiver to ask for the enhanced matching rate instead of their standard 70% rate for expanding Medicaid to only 100% FPL. Utah had a complex set of interlocking waivers that the state legislature approved to spend more money to cover fewer people compared to a full expansion that voters had approved in November 2018. Now those waivers are likely to fall apart, and after a complex series of unfortunate events, a standard expansion with work requirements will most likely be implemented in Utah.
As I noted at Health Services Research, this decision was being anxiously waited upon by several other states:
Utah and Wisconsin have expanded Medicaid to 100 percent FPL so that all citizens of these states earning less than 400 percent FPL are eligible to receive some financial assistance for medical insurance. Utah and Wisconsin are receiving neither enhanced federal funding nor the rate reduction benefits of a full expansion. Other states are also investigating partial Medicaid expansions, which has significant legal and financial implications….
Adrianna McIntyre and I also poked at this idea of a partial Medicaid Expansion at the Health Affairs blog:
These silver-loaded policies only benefit those exchange enrollees who qualify for federal tax credits. The proposal by Utah’s legislature succeeds in expanding Medicaid to only 100 percent of the federal poverty line, keeping the 100-138 percent FPL cohort in the exchange means a sicker risk pool with higher premiums for unsubsidized enrollees, relative to a world where the state fully expands the program to 138 percent FPL….
Furthermore, subsidizing individuals to enroll in private plans is more expensive than covering those same people on Medicaid. States are likely to find the more expensive option attractive, because they do not directly bear the burden of paying the federal tax credits that make these plans affordable for lower-income households. By contrast, Utah would be responsible for shouldering 10 percent of the cost of the Medicaid expansion population from 2020 forward. Partial expansion is thus a clear winner from the state budgeter’s perspective, but a potential loser for the federal government—partial expansion is only a less expensive proposition if fewer people enroll in coverage.
The short run, limited effect is that Utah is highly likely to go to a full expansion. The intermediate run effect is that several states that were potentially considering partial expansions as a viable pathway forward if they received the enhanced 90% ACA match for only the sub-100% FPL population won’t go move forward.