Utah ought to not accept federal funds to expand Medicaid to their low-income residents. Gov. Herbert has had a tough time convincing the Legislature to accept any form of Medicaid expansion. In response, this week he officially announced his much-anticipated plan titled "Healthy Utah" that seeks to retain state control of federal funding. The governor's plan, however, makes the faulty assumption that such federal funding even exists in the first place.
The governor's plan assumes the feds will grant Medicaid expansion funding to the state as a block grant. Utah would then dole out that money, in the form of subsidies, to the 111,000 residents making less than 133 percent of the federal poverty level. The amount provided to each individual would depend on ability to work, household income, access to other insurance and health care needs.
Proponents of providing insurance to low-income people argue that doing so will reduce costs. Insured patients will be able to switch from relying on expensive emergency room visits to visiting primary care physicians covered under their plans. But an experiment in Oregon suggests the opposite. The Oregon Health Insurance Experiment found that those who received Medicaid coverage actually used more primary care and visited the emergency room 40 percent more than those who did not have coverage. Although Healthy Utah requires patients to make copayments to share in the burden of their healthcare costs, overall health care consumption, and thus costs, may increase as in Oregon.
When it comes to the question of how Medicaid expansion would affect state budgets, unrealistic and misguided claims abound. Some organizations like the Center for Budget and Policy Priorities, argue that Medicaid expansion will not have a significant impact on state budgets, as the federal government will foot the bill for 100 percent over the first three years and 90 percent every year after that. A study of Oregon's Medicaid expansion found the state would see a net savings of $79 million dollars from expanding Medicaid when federal funding was taken into account.
But these claims ignore the simple fact that expanding any public service — Medicaid included — requires public funding. Just because money is coming from the feds rather than the state does not mean that additional spending somehow creates savings for taxpayers. If public money is being spent, Utah's taxpayers will have to pay up either now or later.
Not only would Medicaid expansion not be benign for the state budget, it could cause real economic damage. Federalism in Action, a nonprofit research group, predicts that if Utah were to expand Medicaid, the state's increased federal reliance would create economic instability, stunting private-sector job growth.
Gov. Herbert's plan promises Utah would be able to back out if federal funding were to dry up, but entitlement programs are much easier to create than to destroy. Creating a program to help low-income people pay for medical expenses is much more popular than cutting a program in the name of fiscal responsibility. And federal funds very well may dry up given the massive and growing federal debt. Medicaid expansion would take Utah down a path of no return. Gov. Herbert should take Utah down the less politically attractive but more responsible path by saying "no" to Medicaid expansion.
Ryan M. Yonk Ph.D is research assistant professor of economics at Utah State University and is the executive director of Strata Policy, a policy think tank headquartered in Logan. Megan Hansen is a policy analyst at Strata Policy.
| Courtesy Photo Ryan Yonk