Governor Gary Herbert finally took the wraps off his Healthy Utah alternative to Medicaid expansion on Thursday morning.
“It’s important to understand this is the beginning, not the end,” said Herbert who was flanked by a phalanx of community and business leaders from across the state as he made the announcement.
Herbert, who has been negotiating with the Obama administration for nearly a year on Healthy Utah, said he got about 90-95% of what he wanted in the plan, which is more than what any other state has received.
“This has not been done before. It’s not going to be as good as if we built it from the ground up, but it’s the best proposal on planet Earth I’ve seen. I don’t know of a better plan.”
Utah currently sends approximately $680 million in new tax money to Washington, D.C. as part of the Affordable Care Act. Herbert’s Healthy Utah would recoup $445 million in the first year to cover Utahns who are at or below 133% of the federal poverty level.
In order to paint the best picture of how much this program would cost, Herbert’s office commissioned a study to see how many Utahns would be eligible for coverage. Those numbers came back much higher than they anticipated due to what is called the “woodwork effect,” meaning a number Utahns who are eligible for coverage but don’t subscribe would begin to seek coverage simply because of the publicity surrounding the new program.
That means the Healthy Utah plan would cover 95,000 Utahns the first year, 133,000 in the second and 138,000 in the third.
Healthy Utah takes advantage of the federal money offered to states for Medicaid expansion, meaning Utah would be able to cover those 95,000 people in the first year at a cost of $4.6 million to the state. The federal share would be $445 million. In fiscal year 2017, the state share would be $25.8 million while the feds would pony up $518 million. In fiscal year 2018, the state’s cost rises to $45.6 million while the federal government pays $546.9 million.
Clearly health care, specifically Medicaid, is an expensive proposition. In 1999, Medicaid ate up 13% of the general fund. In 2014, that number was 23%.
One of the things that makes Healthy Utah unique among the states is that it’s a pilot program, and the state has the ability to pull out at any time. In fact, Lt. Gov. Spencer Cox told the Healthcare Reform Task force that they have written assurances from the Department of Health and Human Services that Utah can exit at any time for any reason should they determine the program is not working.
“This is the very best we could get out of the administration,” said Cox.
One of the things Herbert was unable to get was a requirement that able-bodied recipients be working or looking for work to receive benefits. The administration balked at allowing Utah to withhold federal funds for those who did not participate. Herbert had to modify his proposal into a voluntary work program. Dr. David Patton, executive director of the Utah Department of Health, said Utah does have other incentives to make people participate in the work program.
“We can withhold state benefits to those who don’t participate in the work effort,” said Patton. “We could even go to the point of withdrawing a person’s driver’s license if they don’t take part.”
Utah is the first state to win permission from the Obama Administration to charge recipients for both co-payments and premiums based on income level. Before this, it was an either-or proposition. Utah also will be able to increase the co-pay cost for using the emergency room from about $8 for a person on Medicaid to $50.
“Recipients will have some skin in the game,” said Herbert. “They’ll be motivated to take care of their own health.”
Healthy Utah is not a slam dunk for Herbert. He still has to get lawmakers to sign off on the proposal, many of whom will balk at the rising price tag for coverage. Assuming the federal money keeps flowing, the state’s share of the cost is estimated to rise to $93 million in 2021.
“Either we discontinue coverage or we absorb $93 million per year as a state,” said Rep. Dean Sanpei (R-Provo). “That’s disheartening to me as a choice.”
“Where would this money come from?” echoed Rep. Frances Gibson (R-Mapleton). “That’s a big number. The political game is we can always pull back, but this means we would probably have to find additional revenue.”
Sen. Gene Davis (D-Salt Lake City) said money should not be the deciding factor.
“This is about the needs of the people of Utah,” said Davis. “This is not about hating the federal government. If we are going to take care of the needs of the people of this state, it always comes with a cost.”
Lane Beattie, President and CEO of the Salt Lake Chamber, urged lawmakers to look at the big picture.
“The fiscally conservative thing to do is to keep Utah’s money home,” he implored. “It’s not standing by while Utah’s tax dollars are used to purchase health care for people in other states. This will keep Utahns hard earned tax dollars here while strengthening the private health care market.”
Now the hard work begins as Herbert has to usher his plan through the 2015 legislature. He says he’s confident that they’ll get something done by the time lawmakers adjourn in March.
“It’s an absolute necessity that we come up with something. I want the legislature to know I look forward to working with them. I will be a partner as we try to find a solution.”