Time for Utah to Fully Expand Medicaid

The Trump Administration announced this week that it won’t let Utah receive the Affordable Care Act’s (ACA) enhanced federal funding for expanding Medicaid unless it makes Medicaid coverage available to not just poor but near-poor adults, as the ACA requires. Utah should respond by quickly implementing a full expansion without harmful coverage restrictions, just as its voters directed last November in a ballot initiative.

That initiative fully expanded Medicaid to cover low-income adults with incomes up to 138 percent of the poverty line. But instead of implementing the initiative, Utah lawmakers passed, and Governor Gary Herbert signed, legislation directing the state to take several steps to circumvent it.

First, the state would implement a “Bridge Plan,” for which it received a federal waiver. Under it, Utah began providing Medicaid to adults with incomes below the poverty line in April, leaving out about 50,000 Utahns with incomes between 100 percent and 138 percent of the poverty line who would have been covered under the ballot initiative. The Bridge Plan waiver also gives Utah unprecedented authority to close enrollment and deny coverage to eligible people if Medicaid costs exceed the state’s budget target, and Utah can take coverage away from people who don’t meet a work requirement. The Centers for Medicare and Medicaid Services (CMS) approved the “Bridge Plan” in March, but with federal funding based on Utah’s regular 70 percent match rate instead of the 90 percent enhanced match rate under the ACA’s Medicaid expansion. As a result, Utah is spending more money to cover fewer people than under a full expansion.

Second, the state would request the ACA’s enhanced match rate for partial expansion and request a “per capita cap” — a per-person limit — on federal funds going to the state. This request is what the Administration now says it will deny.

Utah’s legislation also laid out next steps in case the Administration did not approve the enhanced match for partial expansion. By March 15, 2020, Utah is supposed to submit a “fallback” waiver proposal to implement an expansion up to 138 percent of the poverty line at the ACA’s enhanced match rate. The fallback would not include a per capita cap but would maintain the Bridge Plan’s eligibility restrictions. Utah would only forgo its continued efforts to shrink the voter-approved initiative and adopt a full expansion without restrictions if CMS doesn’t approve that proposal by July 2020 — a full year from now.

There’s no need to delay a full expansion until the deadlines under the legislation, and delay will harm both low-income Utahns and the state budget.

First, every month in which Utah continues to operate under partial expansion is a month in which tens of thousands of Utahns with incomes between 100 and 138 percent of the poverty line remain locked out of Medicaid coverage. Meanwhile, the state is spending more of its own money to cover fewer Utahns.

Second, there’s no guarantee that CMS will approve the fallback waiver. While it approved Utah’s enrollment cap as part of the Bridge Plan, there’s no precedent for letting a state cap enrollment while also receiving the ACA’s enhanced match. In its latest decision invalidating New Hampshire’s waiver, a federal court confirmed that adults who gained eligibility under the ACA’s Medicaid expansion have the same coverage guarantee as other Medicaid beneficiaries, stating that expansion beneficiaries are “on the same plane” as other eligibility groups and entitled to the same legal protections. So allowing Utah to adopt the ACA’s Medicaid expansion and receive enhanced funding, but then deny coverage to eligible people based on its budget targets, would be the same as letting Utah deny coverage to eligible children, seniors, or people with disabilities — a fundamental and unprecedented violation of Medicaid’s guarantee of coverage to everyone who’s eligible.

Third, even if the Trump Administration approves the fallback waiver, its eligibility restrictions would be subject to legal challenge because they don’t promote Medicaid’s central objective of providing coverage. A federal court has already invalidated waivers in Arkansas, Kentucky, and New Hampshire that would take coverage away from people who don’t meet rigid work requirements.

Finally, these eligibility restrictions will do tremendous harm to low-income Utahns. Before the court stopped Arkansas’ implementation of its waiver, some 18,000 Arkansans lost coverage — or nearly 1 in 4 of those subject to the policy. Before New Hampshire’s waiver was vacated, the state paused implementation, because it was on pace to take coverage away from almost 17,000 people, an even larger coverage loss than Arkansas as a share of those subject to the policy.

Meanwhile, enrollment caps put coverage for all Utahns eligible for expansion at risk. They limit enrollment on a first-come, first-served basis, treating similarly situated people differently based on when they need coverage. And because Utah can cap enrollment based on its own budget targets, it’s likely to impose tighter caps during recessions (when state budget problems grow), which is exactly when more people are unemployed and need coverage.

But unfortunately, the state appears to be pursuing a policy of further delay. Governor Herbert announced that the state will still submit its waiver requesting the enhanced match for partial expansion, even though CMS has already said it won’t approve it. The state will then begin work on a proposal for expansion up to 138 percent of the poverty line, but coupled with eligibility restrictions. Indeed, the Governor’s statement suggests that his Administration may develop additional restrictions or impose additional costs on beneficiaries, beyond those that the legislation itself outlines.

Responding to the Trump Administration’s rejection of an enhanced match for partial expansion, the lead legislator on the bill overturning the voter-approved initiative said, “We probably have to implement the thing.” That’s exactly what Utah should do. Rather than continue its drawn-out efforts to limit coverage through restrictive waiver proposals, it should immediately, fully expand Medicaid through a state plan amendment, which the Trump Administration is required by law to approve. Full expansion would extend Medicaid coverage to tens of thousands more Utahns with additional federal funds that will let the state cut its costs, without harmful and unlawful restrictions that impede rather than advance coverage.