Utah this week became the 35th state to approve expanding Medicaid under the Affordable Care Act, but advocates for the poor worry its unusual financing could set a dangerous precedent and lead to millions of people losing coverage across the country.
That’s because the plan (PDF) includes unprecedented annual limits on federal and state spending.
Those restrictions would be a radical change for Medicaid. Since it began in 1966, the state-federal health program for low-income residents has been an open-ended entitlement for anyone who meets eligibility criteria. State and federal spending must keep pace with enrollment.
Joan Alker, executive director of the Georgetown University Center for Children and Families, is concerned that the state and federal Medicaid funding caps can limit how many people are enrolled and what services they receive. She said no state has tried to cap its own funding before.
“This is a way for the state to look like it’s doing expansion when they are really doing very little,” she said.
If Utah’s plan is approved, Alker added, other states that have already expanded Medicaid and some that are considering it will likely seek to strike a similar deal.
Limiting spending on Medicaid has been a longtime goal of fiscal conservatives, but opposition to the idea helped blow up Republican efforts to repeal and replace the ACA in 2017.
Also fueling criticism: The law signed by Utah Gov. Gary Herbert on Monday expands Medicaid only to people earning up to 100% of the federal poverty level instead of the 138% mark set by the ACA and approved by Utah voters in a referendum supporting expansion in November. Both the Obama and Trump administrations have refused in the past to accept that condition.
The proposal also includes a work requirement for adults who gain coverage through the expansion.
Utah’s proposal needs federal approval, and state officials said they hope to have that in time to expand Medicaid to 90,000 adults on April 1.
The state expects to adopt annual spending caps after negotiations with the Trump administration.
Congressional Republicans and President Donald Trump tried to cap federal Medicaid payments as part of their health law repeal efforts in 2017. But that move met stiff opposition from Democrats, hospital and patient advocates and some Republican lawmakers. They warned it would lead to cuts in benefits and enrollment.
Utah’s proposal to limit federal spending was necessary to get the Trump administration to approve its application to only partially expand Medicaid, the state’s top Medicaid official said.
“We were looking for a way to make our waiver more attractive to the federal government,” said Nathan Checketts, Utah’s Medicaid director.
He said the Trump administration last year was skeptical of the state’s proposal to expand Medicaid to adults with incomes below 100% of the federal poverty level—about $12,500 annual income for an individual—instead of 138% of the poverty level—about $17,000 in annual income. That’s because it would mean higher federal spending, since people earning between 100% and 138% of poverty would be eligible for federal subsidies to help pay for premiums for insurance they buy on the ACA exchange.
By capping funding at a negotiated per capita rate, the federal government could better control its spending, Checketts argued.
Under Trump, the federal Centers for Medicare & Medicaid Services has not approved requests by Arkansas and Massachusetts to get the higher federal match rate for partial expansion.
CMS, Checkett added, has been open to a deal since after Election Day.
“They’ve become more receptive to our request than they were last year, but there are no guarantees,” he said.
Under the proposed deal, the federal government would pay 90% of the costs for anyone coming into Medicaid through expansion—the rate set by the ACA. In traditional Medicaid, the state receives a 70% federal match.
The federal spending cap would vary based on how many people are enrolled under expansion. If the costs for covering the expansion population exceeded the federal spending cap, the state could limit how many people it enrolled, Checketts said.
The law also includes a state funding cap so Utah officials can limit enrollment if spending were to exceed the budget, Checketts said. The federal government would also have to approve a state spending cap.
“The state has to balance its budget every year, and this allows the state to align its budget and a certain amount of money to put toward this population and not any more,” he said.
If CMS does not grant the waiver for a partial expansion, the bill requires the state to establish a full expansion in 2020.
Jessie Mandle, senior health policy analyst for Voices for Utah Children, an advocacy group, said the plan is tough to swallow for advocates who have been fighting for expansion for more than six years.
“This will create more barriers and restraints to care,” she said. “This was not the way voters chose to expand.”
Utah’s plan to seek a per capita spending cap comes even though the state’s per capita Medicaid spending is among the lowest, according to a report last year by the Utah Foundation, a nonpartisan research group.
The average cost for each Medicaid enrollee in Utah was $5,326 in 2014, the most recent year for which that figure is available, the report found. That number was the 10th lowest in the United States.
Nationwide, Utah also had the lowest percentage of its population enrolled in Medicaid as of 2016, the report said.
Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.