Policy statement on Medicaid expansion

Overview:
The ACA requires that nearly all individuals be covered by health insurance. Currently in Utah, most Medicaid recipients (e.g. pregnant women, disabled adults, elderly adults) are eligible subject to an income limitation of 100% of the poverty threshold. Adults without children are currently not eligible for Medicaid in Utah. The ACA allows each state to opt into an expansion of Medicaid eligibility. Under the proposed expansion, adults without children would now be eligible, and the income thresholds would be increased, with a new limitation of (effectively) 138% of the poverty threshold (for a family of four, this annual income threshold is $31,809).[1]  Currently Utah’s Medicaid budget is $2 billion and the program has an enrollment of 253,000.  The projected/proposed increase for 2014 is 110,000 persons, at an additional annual cost of about $320 million (after the newly eligible persons are fully enrolled).[2] The federal government would cover all of the increased costs for the first three years of the expansion.  Thereafter, Utah’s share of the cost would gradually expand to 10% of the total cost (with the remaining 90% continuing to be borne by the federal government). In 2011, an estimated 377,000 Utahans, or 13.4% of the population, lacked health insurance.[3] With the ACA’s greater emphasis on each person being insured, it is projected that more Utah citizens who are already eligible for Medicaid will enroll. The anticipated greater enrollment for already eligible recipients is estimated to increase Utah’s share of Medicaid expenditures by $19 million in 2014.[4]

Policy Prescription:

Utah should adopt Medicaid expansion as provided for under the ACA for the following reasons:

Enhancement/preservation of civil society:

  • A nation as prosperous as the United States should make healthcare available to all of its citizens, regardless of age, income, or work status. Adequate healthcare for our citizens is a prerequisite for all of the other things we aspire to as a society. The costs, both tangible and intangible, of the pathologies associated with a large segment of society being uninsured (and therefore lacking consistent and adequate healthcare) far exceed the explicit costs of assisting in providing such healthcare.

Pragmatic/practical aspects to Medicaid expansion:

  • Local government, under Utah state law, is obligated to provide mental health and substance abuse services regardless of whether the beneficiaries can pay for such services.  Medicaid expansion will greatly increase the cost reimbursement realized by Utah municipal governments for providing such services. This will enhance the solvency of local governments, enabling them to provide more services and/or reduce taxes. In large part due to the foregoing, the Salt Lake County Council has voted 8-0 to recommend Medicaid expansion.
  • Hospitals and emergency rooms are already required to provide services, regardless of ability to pay. Medicaid expansion will greatly increase the reimbursement for such services, and thus the financial health and solvency of Utah’s hospitals. This will translate to more jobs and more income for Utah. To help the solvency of the federal government’s budget, the ACA included a reduction in reimbursement to hospitals for some services provided under Medicare. The expansion of Medicaid (and thus increased reimbursements to hospitals) was intended to offset the Medicare cuts. Accordingly, if Medicaid is not expanded, Utah’s healthcare system will absorb the pain, but not the benefits, of the ACA.
  • Over the next 10 years, and assuming the Medicaid expansion is enacted, Utah will receive somewhere in the range of $3.5 to $4.0 billion in additional payments for medical services provided. It would constitute a huge boost to Utah’s collective health, and its economy.
  • Expanding Medicaid, and thus increasing access to preventative care and/or early treatment of both chronic and infectious diseases, will save out-of-pocket heath care dollars in the future and also allow more people to continue as productive and healthy citizens.  Some states have already expanded Medicaid, and it has demonstrated that adding health care coverage to the uninsured population reduces the mortality rate. Those newly insured under Medicaid also report improved health. Finally, expanded Medicaid reduces the number of unpaid medical bills compared to an uninsured population.

[1] Utah Health Policy Project, The ACA and Medicaid Expansion Option; September 2012

[2] PPACA Eligibility Impacts on Medicaid, Utah Dept. of Health, October 4, 2012

[3] Utah Health Access Surveys, Office of Public Health Assessment, Utah Department of Health

[4] Utah State Legislature, Fiscal Highlights, November 30, 2012

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