Utah Wastes $6.6 Million Every Month by Refusing to Fully Expand

Utah Wastes $6.6 Million Every Month by Refusing to Fully Expand Medicaid

In 2018, Utah voters passed Proposition 3, a ballot initiative to fully expand Medicaid. However, the Utah legislature overrode the initiative with S.B. 96, and Governor Herbert signed the legislation on February 11, 2019. The legislation limited Medicaid expansion as envisioned by the voters, but did provide a path to full expansion if a series of state proposals fail to receive CMS approval. In April 2019, “partially expanded” Medicaid based on the state legislature’s claim that the measure would save Utah money. However, this short analysis highlights that every month that the state does not fully expand Medicaid, it costs the state $6.6 million.

Utah Medicaid Expansion Background

S.B. 96 replaced a full Medicaid expansion with four different “phases” for expansion.

Phase 1: Partial Expansion with a Standard Federal Contribution (implemented): As of April 1, 2019, Utah partially expanded Medicaid to residents with incomes up to 100 % of the federal poverty level ($12,490 for an individual). As of August 8, 2019, 35,632^[i]residents enrolled in Medicaid under this option. Because this phase does not fully expand Medicaid to cover residents with incomes up to 138 percent of poverty, however, the federal government only pays 68.19 percent of the costs for this population, and Utah has to pay 31.81 percent^[ii]. According to S.B. 96, Phase 1 will be replaced by one of the following sequential phases.

Phase 2: Partial Expansion with an Enhanced Federal Contribution (rejected): The second phase required the state to submit a waiver to CMS requesting an enhanced 90 percent federal contribution for this same partial expansion population described in Phase 1 (for residents with incomes up to 100 percent of poverty). The waiver also requested provisions to restrict coverage, such as enrollment caps and a per capita cap. CMS rejected the partial expansion request in July and the enrollment cap in August of 2019. Now, Utah is required to move to Phase 3 of S.B. 96.

Phase 3: Full Expansion with an Enhanced Federal Contribution and Controls (pending state design): The state is now beginning to design a proposal for Phase 3, which it will need to submit to CMS by March 15, 2020. This proposal will include full expansion to residents with incomes up to 138 percent of poverty, for which the state will receive the enhanced 90 percent federal contribution. However, Phase 3 also requires the state to request a number of provisions that will restrict coverage, such as work requirements and enrollment caps. CMS already rejected enrollment caps in the Phase 2 waiver. While Utah works through its next expansion proposal to CMS, the state continues to waste millions in taxpayer funds every month.

Phase 4: Full Expansion (if phase 3 is rejected): If CMS does not approve Phase 3 by July 1, 2020, Utah will fully expand Medicaid with no coverage restrictions.

Standard Federal Contribution vs. Enhanced Federal Contribution

The state’s current approach is a partial expansion that covers residents with incomes up to 100 percent of poverty. Under this arrangement, the federal government pays only 68.19 percent of the cost for the expansion population, and the state has to pay 31.81 percent.

If the state moved to a full expansion to residents with incomes up to 138 percent of poverty, the federal government would pay an enhanced contribution of 90 percent, and the state would pay only 10 percent.

It is that difference in what the state pays – 31.81 percent instead of 10 percent for the 0 to 100 percent of poverty expansion group – that means Utah wastes $6.6 million every month that could be picked up by the federal government.

Utah Spends an Extra $6.6 Million Every Month Until It Fully Expands Medicaid

Until the state implements Phase 3 or 4, it will pay 31.81 percent of costs for Medicaid enrollees under 100% of poverty rather than 10 percent. In fiscal year (FY) 2020, 35,632 enrolled residents with incomes under 100 percent of poverty will cost the state approximately $9.6 million per month, rather than $3 million (see Table 1). This means the state is spending an extra $185 a month for every enrolled person (see Table 2)

Utah is actually spending more to cover far fewer people: If the state fully expanded Medicaid and received the enhanced federal match, it could cover every resident in the 0 to 138 percent of poverty expansion group for $1 million less per month than what it currently spends to cover the 0 to 100 percent of poverty group (see Table 3).

Table 1: Utah Wastes $6.6 Million per Month (FY20)^[iii]

Table 2: Utah Overspends $185 per Person per Month (FY20)^[iv]

Table 3: Utah Can Cover 60,000 More Residents and Save $1 Million (FY20-21)^[v]

Conclusion

At an August Utah Health Reform Task Force meeting, the Utah Department of Health reported that the state is paying an extra $2.5 million every month the state refuses to fully expand Medicaid^[vi]. This analysis finds that the figure is $6.6 million, based on Utah’s own enrollment and trend projections.

There is clearly a more fiscally responsible way for Utah to spend taxpayer dollars. It is especially outrageous that the state is wasting millions every month given that the supposed reason that the state overrode the will of the voters was to save the state money. While the next few months will include many conversations about potential “cost controls” under Phase 3, the most financially responsible path the state can take is to fully expand Medicaid.

^[i] Utah’s Medicaid Adult Expansion Report, August 8, 2019, Retrieved from: https://medicaid.utah.gov/Documents/pdfs/mcac/2019Minutes/ExpansionReport_20190808.pdf.

^[ii] Kaiser Family Foundation, Federal Medical Assistance Percentage (FMAP) for Medicaid and Multiplier (FY2020), Retrieved from: https://www.kff.org/medicaid/state-indicator/federal-matching-rate-and-multiplier

^[iii] Families USA analysis of Utah’s Per Capita Cap Section 1115 Demonstration: https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ut/ut-per-capita-cap-pa.pdf) and Utah’s Medicaid Adult Expansion Report, August 8, 2019: https://medicaid.utah.gov/Documents/pdfs/mcac/2019Minutes/ExpansionReport_20190808.pdf. Both data sets were publicly reported by the Utah Medicaid agency. The analysis uses the predicted member months, per-member per-month payment, and trend rates for each of the three expansion eligibility groups in the “without waiver” analysis in the waiver and the actual enrollment totals from the Medicaid Adult Expansion Report.

^[iv] Families USA analysis of Utah’s Per Capita Cap Section 1115 Demonstration: https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ut/ut-per-capita-cap-pa.pdf. The analysis uses the predicted member months, per-member per-month payment, and trend rates for each of the three expansion eligibility groups in the “without waiver” analysis in the waiver.

^[v] Families USA analysis of Utah’s Per Capita Cap Section 1115 Demonstration: https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ut/ut-per-capita-cap-pa.pdf, Utah’s Medicaid Adult Expansion Report, August 8, 2019, (https://medicaid.utah.gov/Documents/pdfs/mcac/2019Minutes/ExpansionReport_20190808.pdf), and Utah’s Medicaid Expansion Implementation Toolkit: https://medicaid.utah.gov/Documents/pdfs/UTAH%20MEDICAID%20EXPANSION%20TOOLKIT%20Final.pdf. All three data sets were publicly reported by the Utah Medicaid agency. The analysis uses the predicted member months, per-member per-month payment, and trend rates for each of the three expansion eligibility groups in the “without waiver” analysis in the waiver, the actual enrollment totals from the Medicaid Adult Expansion Report, and enrollment projections from Utah’s Medicaid Expansion Implementation Toolkit to estimate the number of potential enrollees in the 100 to 138 percent cohort. For the FY21 analysis, all assumptions were held constant and trended by the projections in the Utah waiver. However 60,000 additional beneficiaries were added to the analysis to reflect the potential 100-138 percent cohort, Utah’s high end projection of potential Medicaid expansion-eligible individuals between 100-38 FPL.

^[vi] Deseret News, Utah inching toward full Medicaid expansion after latest fed rejection, August 22, 2019, Retrieved from: https://www.deseret.com/utah/2019/8/22/20828699/utah-full-medicaid-expansion-after-latest-federal-government-rejection