Utah Gov. Herbert: Medicaid Expansion – What’s Next for Utah?

SALT LAKE CITY, Utah, July 31 -- Gov. Gary R. Herbert, R-Utah, issued the following news release:

Last November, Utah Proposition 3, the "Utah Decides Healthcare Act of 2018" ballot initiative, was passed by 53% of Utah voters. Proposition 3 would have expanded Medicaid coverage to previously ineligible adults (children were already eligible) with incomes of up to 138% of the Federal Poverty Level (FPL).

Proposition 3 would have moved approximately 40,000 adults from federally subsidized plans on the federal exchange to Utah's Medicaid program, where the state would have to pay a share of their costs. The detailed provisions of Proposition 3 went well beyond traditional Medicaid expansion as promulgated by the Affordable Care Act.

Proposition 3 introduced other requirements, such as benefit and provider rate floors and mandatory annual reimbursement rate increases for providers of all state Medicaid services, including those delivered to traditionally eligible Utahns who would otherwise be outside the scope of expansion. These add-ons resulted in an unsustainable Medicaid expansion model. Under Proposition 3, state-share expenditures were forecasted to outpace available revenue by $85 million in Fiscal Year 2025 alone.

In order to bring fiscal viability to Medicaid expansion in Utah and to direct social safety net resources to those who need them most, the Utah Legislature passed and Governor Herbert signed SB 96, Medicaid Expansion Adjustments during the 2019 General Legislative Session.

On April 1, 2019, Utah implemented the first phase of SB 96 and expanded Medicaid coverage to adults in Utah below the poverty level who previously did not have access to affordable healthcare coverage. As of the end of July 2019, more than 34,000 Utah adults have enrolled in the expanded Medicaid program. This expansion closed the coverage gap for eligible adults under the FPL.

On Saturday (7/27/19), federal officials announced they do not intend to approve a key element of SB 96 phase two implementation, that is, the request to increase federal cost-sharing for Medicaid expansion from 70% to 90% to serve the coverage gap population.

This Q&A document seeks to clarify the current status of affordable healthcare coverage in Utah and the next steps for Medicaid expansion as outlined in 2019's Utah Senate Bill 96.

How does the federal administration's announcement impact adults currently enrolled in Utah Medicaid expansion, or those who are eligible for Utah Medicaid expansion today but have not yet enrolled?

The administration's announcement does not change the coverage for current Medicaid expansion enrollees in Utah. The "Bridge" program that opened for enrollment on April 1, 2019, remains in place and will continue as the state follows the process outlined in SB 96. Those enrolled in the "Bridge" plan will continue to receive the same benefits and services for which they are currently eligible. Additional "Bridge" plan elements already approved by the Centers for Medicare and Medicaid Services (CMS), such as certain community engagement requirements and the mandatory enrollment in employer-sponsored insurance, will be implemented on January 1, 2020.

Likewise, the administration's announcement does not change the "Bridge" plan coverage available for those adults who have not yet enrolled in Utah's Medicaid expansion plan.

The state encourages anyone who needs healthcare coverage and believes they may be eligible for Medicaid to visit medicaid.utah.gov and apply for coverage today. Utah has expanded Medicaid up to the FPL and more than 34,000 adults are already receiving coverage since the April 1, 2019 expansion.

How does the administration's announcement impact adults currently enrolled in the federal exchange with incomes between 100-138% FPL?

The administration's announcement does not change coverage for current federal exchange enrollees with incomes between 100-138% FPL while the "Bridge" plan is in place. These adults have access to quality, subsidized healthcare coverage on the federal exchanges at a low cost to them, and at no cost to the state. Because the federal government continues to cover the costs of premium tax credits for this population, Utah protects its general fund, enabling the state to continue to support other important social services.

Consider the coverage options on the federal exchange for a 21-year-old, single woman without dependents living in Salt Lake County. According to Utah's Department of Insurance, if this woman had near-poverty earnings, she could access a plan with zero deductibles, a monthly premium of $3.57 and $10 copays for generic drugs and primary care doctor visits. If this woman had earnings near 138% FPL, her monthly premium would be less than $30, again with no deductible and $10 copays for generic drugs and primary care doctor visits. Similarly, plan options exist for parents who are seeking coverage on the federal exchange while their children receive traditional Medicaid benefits. In this example, parents ages 28 and 30, in a family of four with household income near the poverty level could access a plan with zero deductibles, a monthly premium of $9.92 and $10 copays for generic drugs and primary care doctor visits. If this family's income increased to 138% FPL, premiums would increase to $57.53 a month, with the same low-cost copays for drugs and doctor visits.

Availability of coverage through the federal exchange for Utahns with income between 100-138% FPL will continue unchanged unless Utah Medicaid expands to 138% FPL at a later date, at which point adults between 100-138% FPL could transition from the federal exchange to Utah Medicaid.

How does this announcement affect children in need of healthcare or who are currently enrolled in Medicaid?

The administration's announcement has no impact on Medicaid eligibility or coverage for children, pregnant women, very low-income parents, or individuals that are elderly, have a disability, or are blind. The waiver request only applied to Medicaid expansion, not these traditional Medicaid populations.

Low-income children up to 138% of poverty were already eligible for Medicaid. Expansion applies only to adults. Because Utah's Medicaid expansion request only seeks changes for adults eligible for expansion, those low-income children are not impacted by the recent announcement.

Where do Utah's Medicaid expansion efforts go from here?

As directed by SB 96, the Utah Department of Health (UDOH) will submit the "Per Capita Cap" waiver request this week. In addition to the 90% federal/10% state funding match rate, this waiver includes other requests that are of interest to the state:

* Enrollment cap

* Per capita cap

* Community engagement

* Mandatory enrollment in employer-sponsored insurance

* Lock-out for intentional program violations

* Removal of hospital presumptive eligibility

* Up to 12-month continuous eligibility

* Housing supports

Although CMS announced last Saturday that it does not intend to approve the 90/10 funding match for a partial Medicaid expansion, CMS did not indicate whether it would approve other provisions in the waiver request. For this reason, there is value to the state in submitting the waiver and receiving feedback from CMS on all elements in the waiver request. A written response from CMS will help the state determine where the administration stands on these other elements and can help guide the creation of future waiver requests.

In addition, UDOH will begin working with state lawmakers, the Governor's Office, and others in developing the "Fallback" waiver, as directed by SB 96. The "Fallback" plan is intended to cover adults earning up to 138% FPL at the 90/10 match rate. The law directs UDOH to "develop proposals to implement additional flexibilities and cost controls, including cost-sharing tools..." As directed by SB96, the "Fallback" waiver will also request approval to implement a community engagement requirement, a lockout provision for program violations, and a requirement to enroll in an employer's health insurance plan (if offered) with premium reimbursement covered by the state. All of the elements included in the fallback plan can be seen in the following PDF:

Medicaid Expansion: At a Glance (https://medicaid.utah.gov/Documents/pdfs/Adult%20Expansion%20Comparison%20Chart_FINAL.pdf)

SB 96 requires this waiver request be submitted to CMS by March 15, 2020. However, the UDOH will work to expedite the submission timeline.

If CMS fails to act on the "Fallback" waiver by July 1, 2020, SB 96 directs the UDOH to implement full Medicaid expansion to 138% FPL without some of the costly provider rate increase provisions required by Proposition 3.+

Why does the "Fallback" waiver require that UDOH develop proposals for flexibilities and cost controls?

The state is committed to ensuring that Medicaid is both fiscally sustainable while also providing coverage to people who truly need it. Utah Medicaid's General Fund expenditures have grown as a share of General Fund revenues from 12.7% in 1998 to 26.1% in 2017. Utah Medicaid continues to compete for available General Fund dollars primarily collected from a structurally narrowing sales tax base. Therefore, it is simply unrealistic to adhere to a false choice of either increasing taxes to sustain the program or to withhold benefits from those who need them most. Real innovation in Medicaid occurs when we can deliver on both the objectives of providing accessible coverage and controlling root causes of costs, which will necessitate the administration working closely with the Medicaid provider community to include the use of value-based contracting for Utah Medicaid services. In any case, Utah's track record of finding the hidden capacity within our systems and existing resources demonstrates that we can meet our Medicaid obligations while reducing the burden on taxpayers.

More on Governor Herbert's healthcare priorities can be found here (https://governor.utah.gov/issues/healthcare/).