Newest proposal to replace Medicaid expansion will cost estimated $72 million over two years, but may save millions if Utah is given a waiver by the Trump administration

Utah Capitol 18


A newly-introduced version of the bill to supplant Prop. 3 with a scaled-back version of Medicaid expansion will cost Utah taxpayers about $72 million over the next two years, but could result in hundreds of millions of dollars in savings within 3 years. However, that’s only if all goes according to plan.

According to the fiscal note for the newest version of SB96 from Sen. Allen Christensen, R-North Ogden, the partial Medicaid expansion bill will cost the state $32.1 million from the General Fund in FY2019 and $39.8 million in FY2020 to expand Medicaid to Utahns earning up to 100% of the federal poverty level. That would bring healthcare to an estimated 90,000 Utahns who earn about $12,000 or less per year. The 3rd substitute has not officially been introduced. The Utah Senate is set to vote on SB96 Monday. has been told House and Senate Republicans worked over the weekend to refine their proposal to bring the costs down to a level that they felt was more acceptable. There may be another substitute introduced on Monday

Because the expansion in the Senate bill does not fully expand Medicaid, the federal government will only pony up 70 percent of the cost, leaving Utah on the hook for the remaining 30 percent. The legislative alternative to the voter-approved ballot initiative hinges on the state securing two waivers from the Trump administration, which would allow expansion to fewer people, but with the feds ultimately splitting the cost of that expansion  90/10. 

If the waiver is approved, the current fiscal analysis says the state will save $270 million from all sources in FY2020 and a whopping $610 million ongoing by FY2024. The General Fund alone would save more than $19 million annually every year beginning in FY2024. No state has been given such a waiver so far.

That’s a big gamble. The fiscal breakdown does not say what would happen if the waivers are not granted. reported on Friday that legislative leaders want to build in a financial cushion to their expansion replacement bill in case winning waivers from the Trump administration takes longer than expected.

Rep. Robert Spendlove, R-Sandy, who was the sponsor of a limited Medicaid expansion bill passed by lawmakers last year, says the state’s discussions with the Trump administration in order to secure the waiver have been encouraging.

“They have been encouraging states to apply for these waivers,” he said. “They’ve said they want to work with us to get to ‘yes.’”

Spendlove’s bill, which was superseded by Prop. 3, was very similar to this year’s effort. His bill also required the state to win a waiver to get the 90/10 split for covering fewer people.

Lawmakers are rushing to get their Medicaid expansion plan to Gov. Gary Herbert’s desk by next Friday as they need a waiver from the Trump administration to expand coverage to the smaller pool of Utahns by April 1, which was the initial effective date under Prop. 3. A second waiver is needed to get the 90/10 federal/state cost split. Spendlove says it’s almost certain the state will get the first waiver, and he estimates the chances of getting the second waiver at about 85%.

“I’m an economist. 85% are fantastic odds,” he joked.

Prop. 3, which passed in November with 53.3% of the vote, gives Medicaid coverage to Utahns who earn up to 138% of the federal poverty level, which is about $17,500 per year. However, the voter-approved initiative would not cost the state any extra money in the first year. Under the Affordable Care Act, the cost for the full expansion is split with the federal government 90/10. However, a cost analysis from the Governor’s Office of Management and Budget estimates implementing Prop. 3 would result in a $10.4 million shortfall by FY2021. That deficit would balloon to a $64.5 million shortfall by FY2024 as the sales tax hike included in the initiative would not be able to keep up with ballooning costs.