Utah tests Trump on Medicaid expansion

The Trump administration faces a key test with Utah's Medicaid program as the state seeks permission to use billions of federal dollars to expand coverage to only a fraction of the state’s residents.

Utah Gov. Gary Herbert (R) this week signed into law a limited Medicaid expansion plan, defying voters who approved a full expansion in November.

The next big step involves the state asking the Trump administration for permission to launch a partial expansion of Medicaid.

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Under ObamaCare, the federal government pays states that choose to expand Medicaid 90 percent of the costs of doing so. But in Utah’s case, the state is asking the administration for more money to cover fewer people.

State lawmakers are rolling the dice, since the administration has never approved such a request. But with Medicaid expansion gaining popularity in red states, granting approval for a smaller-scale plan like Utah’s could be seen as a way to stem that tide.

Thomas Miller, a health expert at the right-leaning American Enterprise Institute, said he thinks the timing may be right for Utah.

“Sometimes you look at waivers differently depending on what the other options are,” Miller said, referring to the administration.

He added that administration officials may be willing to trade a partial expansion in order to get states to adopt conservative policies, like the per-person spending cap being pursued in Utah that has long been a priority for the administration.

The policy was a component of the GOP’s ObamaCare repeal bill that failed in the previous Congress. Enacting that kind of approach would represent a fundamental shift, changing Medicaid from an entitlement to a capped grant program.

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The administration doesn’t want Medicaid to be “an open-ended flow from government to states. That’s one of the driving forces behind” the Utah move, Miller said.

The Utah expansion would provide Medicaid for people earning up to the poverty line, rather than 138 percent of the poverty level as under ObamaCare. Anyone earning between 100 and 138 percent of the federal poverty level will have to purchase coverage on the federal exchange.

The voter-approved expansion would have covered 150,000 people and would have been paid for by an increase in the sales tax. Under the new law, about 48,000 fewer people will be covered, and it will cost $50 million more than full expansion, according to a state analysis.

The new law includes a cap on enrollment if costs are greater than expected, as well as a requirement that would remove coverage from people that don’t meet a work requirement.

Trump administration officials, including some of those at the Centers for Medicare and Medicaid Services (CMS), have reportedly indicated in private conversations with Utah officials that they would view a partial expansion favorably.

But there’s no guarantee the administration will grant the state’s request. Last year, Arkansas and Massachusetts asked for permission to roll back their Medicaid eligibility to 100 percent of the poverty level.

The administration punted on both, telling the states it was not approving the requests “at this time.”

Andrey Ostrovsky, a senior vice president at Solera Health who was Medicaid’s chief medical officer until leaving the agency in 2017, said Utah’s request aligns with the political priorities of the administration.

“I would not be surprised if the feds do approve what Utah is trying,” Ostrovsky said. “It’s aligned with what the policies to date have been from this administration, which is to limit Medicaid eligibility.”

CMS Administrator Seema Verma, a strong proponent of granting states flexibility with their Medicaid programs, has approved requests to impose work requirements and premiums.

If Verma denied Utah’s request for a partial expansion, Ostrovsky said it would look like she was paying “lip service” to what she sees as innovation.

“If she were to say no, how does that look to state leadership?” Ostrovsky said.

At the same time, the administration might not want to give states any incentive to expand ObamaCare, even if it’s on a smaller scale.

The bill signed by Herbert would cover far fewer people, and cost state and federal taxpayers more money, than the plan voters approved in November. Experts said they expect other states to follow suit if Utah’s request is granted.

“It could be a means for coverage gains in non-expansion states, but it would also be a way to reduce coverage if you’re an expansion state that rolls it back,” said Robin Rudowitz, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured.

Cindy Mann, a partner at Manatt Health who ran the Medicaid program during the Obama administration, said last year’s applicants would likely be the immediate beneficiaries if Utah gets the green light from the administration.

“If they say yes to Utah, they will turn back and tell Arkansas and Massachusetts yes as well,” Mann said.