Utah’s quixotic Medicaid expansion plan, explained

Utah wants to expand Medicaid under the Affordable Care Act. Kind of.

The state legislature has passed and Gov. Gary Herbert has signed a bill that would partially expand Medicaid through the ACA — up to 100 percent of the federal poverty level (about $20,000 for a family of three) instead of the 133 percent threshold prescribed in the health care law. The Utah plan would also institute a work requirement.

It’s a big deal. Utah is one of the few states to move toward Medicaid expansion under the Trump administration, and the expansion would cover more than 70,000 people in the state. A Republican-led state taking any affirmative steps toward accepting the ACA as reality and expanding health coverage to their poorest residents should not be ignored.

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But there is a huge catch: the partial expansion piece. Utah isn’t planning to follow the letter of the law, which would require expanding its Medicaid eligibility up to 133 percent of the poverty level. It wants to go to only 100 percent. That would, in theory, require federal approval.

We have a very recent test case for this: Arkansas, which had already expanded Medicaid in 2014, proposed scaling back its Medicaid eligibility from 133 percent to 100 percent. But when the Trump administration approved Arkansas’s request for a work requirement, it declined to issue a decision about the partial expansion — which some interpreted as a gentle way of rejecting the proposal.

One other Medicaid expansion state, Massachusetts, has also proposed rolling back to a partial expansion. As we covered back in August, there are at least three good reasons to doubt the Trump administration would approve a partial Medicaid expansion:

  • It might simply not be legal, because the ACA specifically dictates that Medicaid expansion is up to 133 percent of the poverty level.
  • Under the waiver program that states have proposed a partial expansion, these proposals are supposed to have some kind of legitimate experimental goal. They should “test” some thesis and provide some kind of way to improve Medicaid overall. It’s not at all clear that a partial expansion would have that kind of demonstration value.
  • It would open the floodgates. States will eventually have to cover 10 percent of the cost for Medicaid expansion enrollees, so if the people from 100 to 133 percent of the poverty level move from Medicaid to the ACA marketplaces under a partial expansion, it would save states money — and cost the feds more, because they would now have to provide tax credits for private coverage for those people.
  • There is one possible distinction between Arkansas and Utah: The former state had already expanded Medicaid and was asking to pare it back; the latter state would be expanding Medicaid for the first time.

    It’s a distinction Utah officials are relying on. “Our request is to expand coverage, while their request is to lower coverage,” one legislator told the Salt Lake Tribune.

    But it might not make much difference in the federal response.

    ”Politically, there is no way that CMS could explain to the governors of either Arkansas or Massachusetts why Utah can get a different Medicaid match rate than they do for covering the same people,” Eliot Fishman, who oversaw Medicaid waivers under President Obama and is now with the health care coverage advocacy group Families USA, told me. “And legally, CMS has never had the discretionary power to award different states different match rates for the same eligibility group, and giving CMS that discretion would be crazy — hugely prone to abuse.”

    So in short: Utah opening the door to Medicaid expansion is symbolically important, but, barring some daring legal interpretation on the part of the Trump administration, this specific proposal probably won’t be approved.

    In other (brief) waiver news…

    We got one other tantalizing bit of Medicaid waiver news last week: Inside Health Policy reported that the Trump administration was expected to deny Massachusetts’s request to establish a drug formulary for Medicaid.

    If you need a refresher, we covered the Massachusetts proposal in VoxCare last fall. A drug formulary would allow the state to decide whether or not to cover certain medications, which would in turn hypothetically give it leverage to negotiate deeper discounts with drug makers.

    This is an idea that the Trump administration has appeared receptive to; Health and Human Services (HHS) included a similar proposal in its budget this year, though it indicated it might need congressional approval.

    According to Inside Health Policy, HHS is reluctant to approve the waiver because officials are worried about drug companies suing over the policy and winning and/or they are concerned that every other state would follow suit if Massachusetts is allowed to set up a formulary.

    These rationales were unsatisfying to health policy Twitter. I’d suggest reading this thread from Washington University in St. Louis’s Rachel Sachs. She wondered: If the reason for rejecting the waiver is that HHS doesn’t have the legal authority, why not say that directly?

    But if the reason is HHS doesn’t want to set an example for other states, that is even more suspect.

    ”That’s exactly what CMS is doing with work requirements — so why not here?” Sachs wrote.

    Disclaimer: This is a leaked report, which appears to originate with sources within the drug industry. We can’t quite take it as gospel. We’ll be watching closely for the official decision.

    This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.

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