February 12, 2019

Utah lawmakers, defying voters, scale back Medicaid expansion

Daily Briefing

    Utah Gov. Gary Herbert (R) on Monday signed into law a bill (SB 96) intended to scale back the state's voter-approved Medicaid expansion under the Affordable Care Act (ACA).

    Cheat sheet: What you need to know about the ACA

    Background

    Under the ACA, states expanding their Medicaid programs must offer coverage to individuals with incomes up to 138% of the federal poverty line (FPL). The federal government currently covers at least 90% of the cost of expanding Medicaid up to 138% FPL.

    Last year, 53% of Utah voters approved Proposition 3, which directs the state to expand Medicaid coverage to individuals with annual incomes up to 138% FPL and implement a 0.15% sales tax on nonfood items to cover the cost of the expansion. Under the measure, the state would expand Medicaid coverage to an estimated 150,000 Utah residents who currently do not qualify for Medicaid or subsidized insurance from the state's exchange market.

    However, the state's Republican lawmakers raised concerns that the ballot initiative's sales tax would not generate sufficient funds to cover the expansion's costs and introduced a bill to scale back the expansion. The state's Legislature approved the measure, and Herbert on Monday signed it into law.

    Law details

    The law seeks to limit the voter-approved Medicaid expansion by restricting Medicaid eligibility to individuals with incomes less than or equal to 100% FPL, which is about $12,140 for an individual. Under the law, Utah will ask the federal government to provide the same level of federal cost-sharing for the partial Medicaid expansion as states typically would receive for fully expanding Medicaid.

    The law also limits the growth of per capita costs for the state's Medicaid program and will freeze enrollment in the state's expanded Medicaid program if the costs exceed the amount provided in the state Legislature's appropriations.

    If, however, CMS does not approve the partial expansion plan, the law calls for with the voter-approved Medicaid expansion to take effect beginning in 2020.

    An estimated 90,000 Utah residents would be eligible for coverage under the partial Medicaid expansion, compared with 150,000 Utah residents who would be covered under the ballot measure's requirements.

    Utah officials say CMS is willing to approve partial Medicaid expansion

    CMS has not yet approved a partial Medicaid expansion, but Paul Edwards, Herbert's deputy chief of staff for policy, and Nathan Checketts, the state's Medicaid director, said although CMS officials initially had said they could not approve the state's request, CMS Administrator Seema Verma recently signaled her willingness to do so.

    According to Edwards and Checketts, CMS' openness stems from the state's proposal to combine the partial expansion with a per-person cap on Medicaid spending. According to the Washington Post, approving such a cap would represent "a fundamental shift in [Medicaid] from an entitlement available to anyone who is eligible, to a grant with a per capita dollar limit"—mirroring a proposal floated by Republican lawmakers in 2017 as part of legislation to repeal the ACA.

    Separately, state Rep. James Dunnigan (R) said he spoke with a senior CMS official at a recent conference who also indicated the federal government's openness to approving a partial Medicaid expansion. Dunnigan said, "We think there is a very good chance."

    A CMS spokesperson declined to comment on whether the agency is likely to approve Utah's request, the Post reports.

    Approval could lead to legal challenges, more requests for partial Medicaid expansions

    The federal government is expected to face legal challenges if it approves Utah's partial Medicaid expansion.

    Health policy experts also anticipate such an approval would lead other Republican-led states to file similar requests. Currently, lawmakers in Idaho are considering restricting the state's voter-approved Medicaid expansion.

    Robin Rudowitz, a Medicaid analyst at the Kaiser Family Foundation, said, "Other states that have not expanded may seek something like a partial expansion if Utah's is approved. There's also a risk that states that have already expanded would seek to roll back coverage by adopting a partial expansion"  (Goldstein, Washington Post, 2/11; Baker, "Vitals," Axios, 2/12; Leonard, Washington Examiner, 2/11).

    Cheat sheet: What you need to know about the ACA

    book

    The Patient Protection and Affordable Care Act, otherwise known as the ACA, is the comprehensive health care reform bill passed by Congress in March, 2010. The law reshapes the way health care is delivered and financed by transitioning providers from a volume-based fee-for-service system toward value-based care.

    Download the ACA cheat sheet to get a quick overview of this significant U.S. health care legislation.

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