Billions in Medicaid funds await if Utah can say ‘yes’
February 10, 2015
Healthy Utah, the governor’s Medicaid-funded health-care insurance expansion plan, has met stiff resistance in the Utah Legislature. The Health Reform Task Force, comprised of 11 state legislators, has voted 8-3, along party lines, to not recommend the plan to the Legislature and to instead seek a far smaller health-care bill.
One of the three Democrats on the Health Reform Task Force is Senator Gene Davis (3rd District), the minority leader. In response to the task force vote, he introduced a bill, S.B. 83, to implement the full Medicaid expansion built into the Patient Protection and Affordable Care Act (dubbed "Obamacare") as it was designed.
The longtime lawmaker says he has been on the legislative task force, in one of its iterations or another, since the late 1980s. He spoke last week with The Park Record about the health-care expansion situation, and said the Legislature at first seemed open to the governor’s plan.
"I think the Healthy Utah proposal was accepted very well by the committee over time as we were appraised on what was happening with it," he said. "We were kept abreast of how the governor’s negotiations went on in Washington, D.C. Last year, we challenged the governor to go back to Washington and cut a deal. And he came back with Healthy Utah, where he claims he got 95 percent of what he wanted out of the Feds — which is a pretty good negotiation."
"We’ve got 195,000 people in the state of Utah who basically have no access except the most expensive place, which is the emergency room," Davis said. The state estimates that Utah hospitals and community centers provide $331 million in uncompensated care to the uninsured each year. Healthy Utah is projected to cut uncompensated care by more than $51 million per year.
The financial aspects of health-care expansion are, in many ways, at odds with the Legislature’s animosity toward the federal government.
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In September 2013, in a report titled "Medicaid Expansion Options," prepared by the state Department of Health for the governor, a program like Healthy Utah was projected to have an annual cost to the state of about $35 million annually by 2023. Healthy Utah, however, is forecasted to cost Utah much more — $78 million annually by 2021.
The plan’s actual annual cost would be closer to a billion dollars, but the federal government is paying 90 percent of the total costs (it pays around 71 percent for Utah’s existing Medicaid program).
"For $78 million, you get $600-some-odd million back," Davis noted.
"Obama took it from us and I want it back. It’s that simple," said Gov. Gary Herbert during his weekly legislative press conference on Feb. 6.
The Healthy Utah plan states that economists predicted "economic growth" if the state accepts the federal funds available for Medicaid expansion.
The federal government is paying an even greater share than 90 percent of the costs initially, but every year Utah delays expansion it misses out on the basement-bargain deal years. From 2014 through 2016, the federal government is picking up 100 percent of Medicaid expansion costs — the years aren’t negotiable, so Utah can only get in on the last of the 100-percent years if an expansion is passed during the current legislative session.
That $78 million annual tag is projected to insure 146,000 Utahns, at a cost of $533 per person, according to the state. On the other end of the spectrum, the Health Reform Task Force’s proposed plans cover between 10,000 and 15,000 "medically frail" Utahns, at an annual cost by 2021 of between $28 and 40 million, or around $2,500 to $2,800 per person.
"You do the math. Which one seems to be the most sensible to you?" Gov. Gary Herbert said during his weekly legislative press conference on Feb. 6.
"I think the contrast is stark," he added.
A full Medicaid expansion, on the other hand, was projected by the state to cost Utah less than $40 million per year after 2020, at an annual cost per person of around $325.
Why is Healthy Utah more expensive than full Medicaid expansion? It’s not because it’s a better deal for Utahns — it’s more costly for both the taxpayer and those living in or near poverty that it seeks to insure — but rather because it’s "administratively more complex than a full Medicaid expansion," as the Medicaid Options Report stated, due to the private insurers it brings into the process.
"You’re paying a premium," Davis said. "Under full Medicaid expansion, there is no premium. You have access to health care through the Medicaid door instead of access through the insurance company."
"Right now the doctors are paid directly by Medicaid. So now you’ve added one more gatekeeper, if you will," he said. "Full Medicaid, you don’t have to go through those hoops."
"Everything we do has to go through the free market system," Davis said of the Legislature’s general position.
But is the Legislature really prepared to forego indefinitely the hundreds of millions of dollars that Utahns continue to pay in federal taxes each year, that are waiting for the state to use to expand access to health care to its neediest?
"Could be," Davis said. "There are those who are saying we don’t want to take any money from the feds. We are not going to take any money — even if it’s our money we don’t want it."
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