Gehrke: Utah lawmakers warn that Medicaid has busted other state budgets, but has it really?

Francisco Kjolseth | The Salt Lake Tribune The Salt Lake Tribune staff portraits. Robert Gehrke.

Republican legislative leaders are throwing all of their muscle behind Sen. Allen Christensen’s bill to supplant the Medicaid expansion approved by voters. It passed the Senate and will go before a House committee this week.

The primary concern expressed over and over by Republican senators boiled down to one thing: Cost.

Specifically, they are concerned the program will be swamped with people signing up, more than the state can afford and also that the sales tax increase that was supposed to pay for the program won’t raise enough money.

So let’s look a little deeper at three of the talking points being used to move SB96 forward.

The claim: During debate on SB96, the scaled-back Medicaid bill that passed the Senate on Monday, Sen. Jake Anderegg cited significant enrollment overruns in nearly every state that has expanded. He said legislators from other states warned not to expand Medicaid, since the states could not keep up with the runaway costs.

The reality: It’s true that, especially among the states first to expand, enrollment went well beyond what was anticipated. But that doesn’t mean state budgets were blown to pieces, as some have warned.

Colorado, for example, is one state that had much higher enrollment than anticipated. About 160,000 Coloradans were expected to enroll. Out of the gate, 289,000 people signed up and initially costs were about 29 percent higher than expected.

But because Colorado jumped on board early, the federal government covered almost all of that expense.

Furthermore, a nonpartisan analysis of the impacts of expansion in Colorado found that Medicaid expansion “is already having and will continue to have a significant positive impact on the state’s economy.” Specifically, expansion generated more than 31,000 new jobs in the health care sector and an additional $3.85 billion for Colorado’s economy. Household earnings also increased by an average of $643 per household.

New Mexico projected just under 140,000 people would sign up for its expanded Medicaid program by 2015. The number turned out to be about 224,000. A big miss. State legislative analysts project the state will have to come up with an additional $150 million to pay for the program by the 2020 budget year.

However, an independent analysis out of the University of New Mexico said the state may be saving money on the whole. That’s because those on state-funded safety net insurance were transferred to Medicaid rolls. On top of that, the rate of uninsured fell, personal income grew and health care jobs spiked. Underserved communities received greater access and “a careful analysis of General Fund impacts indicates that the program is basically paying for itself.”

In Arizona, a study found that Medicaid expansion generated 21,000 new jobs, $2.7 billion in economic output and lowered the state’s unemployment rate by 0.7 percent.

Louisiana enrolled 433,000 residents in 2017, the first year it expanded Medicaid, and saw $199 million in savings. Last year, the forecast was an additional $26 million in savings, as enrollment in the program slowed.

A study in the New England Journal of Medicine found that expansion in Michigan will sustain an additional 30,000 jobs in the state and yield as much as $153 million in new state tax revenue.

While every state is different, a study of national data by Health Affairs determined that “There were no significant increases in spending from state funds as a result of the expansion, nor any significant reductions in spending on education or other programs.”

All told, the most recent Census Bureau figures show that the rate of uninsured in states that expanded Medicaid was 6.5 percent, 5.7 percent lower than in states that did not expand Medicaid.

The claim: Medicaid expansion under Proposition 3 is projected to create a $65 million deficit in 2024 and the program is unsustainable.

The reality: According to an analysis from the Governor’s Office of Management and Budget, as it’s currently written, there would be a $65 million deficit in 2024 under Proposition 3.

But it doesn’t have to be that way. Everyone agrees — including the Proposition 3 advocates — that legislators need to fix an inflation adjustment formula that would inadvertently drive costs through the roof.

Rep. Ray Ward, R-Bountiful, a physician and a proponent of expansion, has a bill that would simply do that and leave the rest of Prop 3 unchanged. According to an analysis from the Legislative Fiscal Analyst, that change alone means the program would not only run a surplus up to 2024, there would be enough money left over to build up a $195 million reserve fund by that time.

Those hefty surpluses don’t even touch the hospital assessment — a tax on hospitals that stand to gain significantly by not having to provide uncompensated emergency care. If that was added into the mix, the reserve account could have $270 million in the bank by 2025.

The claim: During debate on SB96, Christensen said the bill does not repeal Proposition 3.

The reality: If the state does not get a waiver from the federal government, the entire expansion program is repealed. If the state does get a waiver, SB96 basically would reinstate what the Legislature passed during the 2018 session — before Proposition 3 was on the ballot.

Under either scenario, none of Proposition 3, aside from the sales tax increase to pay for the program, would survive if SB96 passes the House this week.