Lawmakers’ rejection of Proposition 3 is costing Utahns $2.5M each month, state Medicaid director says

By rejecting full Medicaid expansion under a voter-approved ballot initiative, and opting instead for a more restrictive program, Utah lawmakers have rung up millions of dollars in monthly health care costs, the state’s Medicaid director said Thursday.

“Our estimate is it’s about $2.5 million per month that the state is spending in additional general fund [payouts] right now — spending more now than it would if we were under full expansion,” Nate Checketts told members of the Legislature’s Health Reform Task Force.

Checketts’ comments came during a presentation on Utah’s Medicaid expansion, which hit a snag last month when the Trump administration indicated it plans to reject the state’s request for a waiver from the requirements of the Affordable Care Act, or Obamacare.

Under the federal health care law, states are eligible to receive enhanced funding for Medicaid beneficiaries by expanding enrollment to include anyone earning less than 138 percent of the poverty level, or $16,753 for an individual. But Utah lawmakers, citing the potential for excessive costs, rejected full expansion and instead enacted SB96, which limits enrollment to 100% of poverty while leaving the remaining expansion population to purchase subsidized health insurance on the Obamacare marketplace.

Lawmakers acknowledged at the time that their initial “bridge” expansion would cost more compared to full expansion. But they relied on verbal assurances from federal Medicaid administrators that Utah’s waivers ultimately would be approved, resulting in a more favorable split of Medicaid expenses with Washington and shrinking the price tag for Utah taxpayers.

“It’s not accurate that we’re paying more for covering fewer people — we’re covering the same number of people,” Rep. Jim Dunnigan, R-Taylorsville, said Thursday. “Between the [Obamacare] exchange and Medicaid, we’re covering to 138% of poverty, the same as Proposition 3 did.”

But Checketts’ presentation Thursday also illustrated the financial effect of limited expansion on potential Medicaid beneficiaries.

Roughly 40,000 low-income Utahns enrolled in Obamacare plans pay “hundreds of dollars out of pocket rather than thousands” that they would under traditional, private health insurance, Checketts said. But those costs are considerably higher than those same patients would face under Medicaid.

“For the full expansion plan,” Checketts said, “they would have no premium and would have $4 copays for most of their services.”

Checketts also noted that low-income Utahns who missed the most recent open enrollment period for Obamacare — perhaps because they anticipated signing up for Medicaid under Proposition 3 — are locked out of those plans until later this year, a criticism of SB96 raised in previous legislative hearings.

Utah may yet see Medicaid fully expand — or expand further than its current eligibility requirements — under SB96, which includes a series of fallback provisions that were added to the bill to shore up support during the past legislative session.

Checketts said his department is preparing a “Phase 3” waiver request that would include individuals earning up to 138% of poverty but with the provision that beneficiaries enroll in employer-sponsored plans, if available to them, and comply with a work requirement.

If that waiver also fails — similar work requirement plans in other states have been rejected or overturned in court — then the state would proceed to a final “Phase 4” next year that involves a clean expansion, similar to Proposition 3.

On Thursday, the task force’s Democratic members pressed Checketts on whether Utah could simply enact full expansion now.

“I’m just wondering, because of our knowledge with what’s happening, why we can’t just proceed to Phase 4, which is what the voters approved,” said Rep. Marie Poulson, D-Cottonwood Heights. “It looks like what we’re doing is just prolonging the ability for these people to get health care and also paying three times the cost.”

Checketts responded that the terms of SB96, which remains in statute, prohibit the Department of Health from enacting full expansion on an expedited timeline.

“If you wanted to move to Phase 4 before June 30, 2020," Checketts said, “you would have to change the law.”

The state’s partial expansion to 100% of poverty began April 1, and Checketts said 35,632 individuals had enrolled as of last month. The department estimates that between 70,000 and 80,000 low-income Utahns are eligible to enroll under the current expansion.

“Either our estimates are high, or people are not enrolling," Checketts said. “But the program is open.”

Dunnigan, the House sponsor of SB96, also emphasized that the $2.5 million Utah is paying each month under SB96 may not reflect savings that the state enjoys from patients being enrolled in federally subsidized heath insurance plans instead of the state-sponsored, fully expanded Medicaid program.

“As they migrate [to Medicaid]," he said, “then we’ll have to pay 10% of that.”