Utah recently passed an expansion of Legacy Medicaid. This is an improvement for the lives of the 16,000 people who are projected to receive coverage. But it is also an illustration of the cost of spite.
Deseret News has the details:
Gov. Gary Herbert told reporters that he would sign HB437 (sponsored by Rep. Jim Dunnigan, R-Taylorsville), which would extend Medicaid coverage to Utahns who have the greatest need…
Bill details are in this story:
A bill backed by Republican House leaders extending Medicaid coverage to Utahns in the “greatest need” because of homelessness, run-ins with the law, substance abuse or mental health issues won committee approval Monday.
“We have the opportunity to improve the lives of 16,000…
Gov. Gary Herbert saw his Healthy Utah plan to use the hundreds of millions of dollars available under Obamacare to cover all of the estimated 110,000 Utahns eligible for Medicaid expansion pass the Senate but fail in the House last session….
The cost to the state is about $30 million, he said, with the federal government paying about $70 million. He said Utah hospitals will pick up 45 percent of the state’s share, some $13.5 million.
Spite is expensive.
There are approximately 110,000 people in Utah who qualify based on income for Medicaid expansion (thank you very much Chief Justice Roberts). In the current calendar year, the Federal government will pay 100% of the cost of covering those individuals via Medicaid Expansion. In CY 2017, the feds will pay 95% of the cost, then 94% in 2018, 93% in 2019 and 90% in 2020 and over the long term. A Legacy Medicaid expansion which this is means the Federal government is picking up 70% of the cost from the first day of the program start to the last day of the program. Utah will need to come up with the other 30%.
In 2016, complete Expansion means the state is paying on net, nothing to cover 110,000 people. Under this legacy expansion, the state is paying $30 million to cover 15% of the eligible population. In 2017, the state will actually have to kick some money in. However, it will be less than then the $30 million obligated as the current program is skimming individuals who are highly likely to be high cost individuals. The uncovered population will tend to be healthy and cheap. By 2020, the state may be spending slightly more to cover the entire population that is eligible rather than the small subset of the population that they want to cover.
However, expansion at that point will be bringing in massive net federal cash flows that show result in higher state tax revenue so a dynamic analysis will probably show that expanding a subset program under Legacy Medicaid match rates versus a full expansion is still close to a net wash from the state finance perspective. At most, covering the entire population at the enhanced federal reimbursement rate is a pittance more than covering an expensive subset at the regular Legacy Medicaid federal match rate.
Spite is expensive.