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Utah Proposal Would Jeopardize Medicaid Expansion Coverage for 150,000 Utahns

Some Utah legislators are considering repealing the initiative that voters approved last November to expand Medicaid under the Affordable Care Act (ACA) to low-income adults, which would provide Medicaid coverage to about 150,000 Utahns. In its place, the state would pursue a federal Medicaid waiver that would cover far fewer people, couldn’t be in place as quickly as the Medicaid expansion, and would contain provisions that the federal Centers for Medicare and Medicaid Services (CMS) won’t likely approve.

The bill that the legislators will introduce apparently would repeal the Medicaid expansion initiative and direct the state to pursue a waiver similar to the one that Utah proposed last year. (After the election, the state asked CMS to no longer consider the earlier waiver.) That earlier proposal would have extended Medicaid coverage only to non-elderly adults with incomes below the poverty line, as opposed to below 138 percent of the poverty line, as the ACA requires for states expanding their Medicaid programs. It also asked CMS to cover this smaller group at the ACA’s enhanced Medicaid expansion matching rate, under which the federal government pays 90 percent of the cost of coverage, as opposed to the state’s regular match rate of about 68 percent. CMS denied earlier requests from Arkansas and Massachusetts that they receive the enhanced matching rate to cover only part of the expansion population. Thus, there’s a high chance that CMS wouldn’t approve a new waiver proposal from Utah with the same type of request and, consequently, no coverage expansion would ever occur.

If CMS did approve such a proposal, it would leave far fewer people covered — and, as a result, smaller improvements in access to care, financial security, and health, and smaller declines in uncompensated care — than the initiative that voters approved. Like the proposal of last year, for example, the new proposal would likely include a provision that would take coverage away from people who don’t meet a rigid work requirement. In Arkansas, more than 18,000 people — over a fifth of those subject to the requirement — have already lost their health coverage due to a program similar to the one Utah may pursue.

State officials have said that it’s possible for the state to submit the necessary state plan amendments under the voter-approved initiative in time for expansion coverage to begin on April 1. If legislators instead direct the state to pursue a new waiver, coverage couldn’t start on April 1, no matter how quickly the state submits a proposal and even if CMS ultimately approves the partial expansion. That’s because federal rules require a state to hold a 30-day public comment period on any proposed waiver, after which the state must spend more time incorporating the public’s feedback into the proposal. Then, after the state submits a proposal to CMS, at least 45 days must elapse (during which a 30-day federal comment period must occur) before CMS can make a decision.

CMS typically takes months to complete a waiver proposal review and make a decision, even when a state proposes something far more straightforward than what Utah is contemplating. If CMS approves a waiver, a state then typically takes at least several months to configure its eligibility systems and make other preparations to implement the waiver’s provisions.

The legislators say they will pursue this strategy to limit the state’s Medicaid costs. But even under the state’s new projections, the small sales tax increase included as part of the ballot initiative would cover 90 percent of the state’s cost of expansion, leaving a shortfall of $10 million in state fiscal year 2021. That means Utah legislators are considering jeopardizing coverage for 150,000 people due to concerns about a possible shortfall that — if it materialized — would amount to $6 per person who would gain coverage per month.

And that cost may be overstated, because the new estimates don’t incorporate savings elsewhere in the state’s budget from the expansion that previous estimates have projected, such as lower state spending on the state’s medically needy program as more low-income uninsured people gain Medicaid coverage through the expansion and lower spending on public assistance programs. These offsetting budget savings are why many states have found expansion to save them money, as we’ve explained and as other research has consistently shown.