The cost of not expanding Medicaid in Utah

December 16th, 2019|Op-Ed|0 Comments

This Op-Ed by Action Utah fellow Austin Ryan-Mas originally appeared in the Salt Lake Tribune and can be read in its entirety here.

Utah’s roll out of Medicaid expansion, as directed in Senate Bill 96, is costing the state millions of dollars each month compared to full Medicaid expansion as allowed by the federal Affordable Care Act. SB96 was designed, in theory, to save money, but the way the bill has actually been implemented is costing the state tens of millions of dollars.

These losses stem from the inability to implement an expansion plan in which the federal government pays a higher percentage of state Medicaid costs. The federal government has been paying 70 percent of state Medicaid costs (a 70 percent federal match rate) for years now. Under the Affordable Care Act, the federal government had agreed to increases to a 90 percent match rate for states that fully expand Medicaid. However, SB96, the Utah Legislature’s Medicaid expansion plan, adds several stipulations, and only covers individuals earning up to 100% of the poverty level (the Affordable Care Act requires that states expand Medicaid to cover individuals earning up to 138% of the poverty level).

Thus, SB96 doesn’t guarantee a federal match rate increase because of these stipulations. As part of SB96, Utah submitted a waiver request to the federal government requesting an increased federal match rate. This proposal was rejected by the Trump administration due to SB96’s added stipulations and restrictions. A fallback proposal has since been submitted to the federal government.

The problem is that, while we wait, Utah is losing approximately $5.3 million a month covering new Medicaid enrollees because the federal government is still only covering 70 percent of the state’s Medicaid cost instead of 90 percent. This number is based on the Utah Department of Health’s projected cost of $9,283 per year per new Medicaid enrollee.

Proponents of SB96 argue that this number doesn’t take into account the cost of covering individuals earning between 100 percent and 138 percent of the poverty level, which would be required under the Affordable Care Act. This is a fair point. However, the extra cost to Utah for covering individuals earning between 100% and 138% of the poverty level, based on current enrollment rates, would be $1.3 million a month, which means the state is still losing around $4 million a month.

Families USA, a national voice for health care consumers, calculated Utah’s losses to be between $2.5 million and $6.6 million a month.

SB96 lays down a strict implementation schedule for Medicaid expansion. If the fallback proposal is accepted by the federal government, it will go into effect on March 15, 2020, at the earliest. If it is rejected, full expansion, as dictated in the Affordable Care Act, will go into effect on July 1, 2020. This schedule spells a loss of $46 million between April 1 (when SB96’s bridge plan went into effect) and March 15, 2020, and $60 million by July 1, 2020.

Some legislators argue that there are legal paths to more quickly implement full expansion. Others say that Utah has no choice but to wait until summer 2020, as directed by SB96.

The bottom line? Utah has lost upwards of tens of millions of dollars, and every month we delay in implementing a federally accepted expansion plan those losses grow.

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