Utah seeks more federal funding to expand Medicaid

Utah is seeking permission to become the latest state to expand Medicaid, but in a wrinkle, wants the federal government to pay a greater share of the costs for the expansion.

Under a bill passed by the state's Senate on March 8, after being approved by the House, the state would seek a waiver from the Centers for Medicare and Medicaid Services, or CMS, to expand coverage to about 72,000 more people by letting individuals who are below 95% of the federal poverty level qualify for the anti-poverty program.

Medicaid eligibility in Utah currently varies on several factors, but is as low as 55% of the poverty line for adults without children.

The request, if approved by the state's Republican Gov. Gary Herbert, would raise a question a question CMS avoided March 6 in only partially-approving Arkansas' waiver request, said Robin Rudowitz, associate director of the Kaiser Family Foundations' Medicaid and uninsured program.

Under the Affordable Care Act, the federal government pays a higher share of the cost of expanding Medicaid but only gives the money to states willing to expand the program to those making 38% more than the poverty line.

Utah's proposal would ask the federal government to pay 90% of the additional costs of expanding the program, up from 70%, but is only willing to expand Medicaid up to the poverty line.

Arkansas had also sought to keep expanded federal funding even though it wanted to lower eligibility from 138% of poverty to the poverty line, Rudowitz said. CMS granted a portion of the request to impose a work requirement but punted on the funding question, she said.

Stacy Stanford, health policy expert for the Utah Health Policy Project, though, was skeptical CMS would agree to pay more to expand Medicaid expansion — a linchpin of the Affordable Care Act the Trump administration has wanted to repeal.

"On the surface, it seems like a big win" in expanding coverage, Stanford said in an interview. "But we know there's a huge asterisk at the end of the celebratory headline. We see zero reason to believe it's going to be approved."

But the bill's sponsor, Republican State Rep. Robert Spendlove, said in an interview that state officials have been communicating with CMS and have mentioned the 90% figure. CMS has not rejected the idea.

"They've encouraged us to do this, and make our best effort, and they'd seriously consider it," Spendlove said. By giving more states flexibility, the administration "appears to be trying to help states previously didn't expand find a way to cover more people," he said.

The waiver, meanwhile, also includes several conservative principles, including a work requirement that CMS Administrator Seema Verma has backed. The approval of Arkansas' waiver request made it the third state — after Indiana and Kentucky — to get what is known as a Section 1115 waiver from the agency to adopt a work requirement.

In addition, Utah's request would cap the number of people covered under the expansion, which Spendlove said is needed to protect the state, if more people sign up for coverage than expected due to an economic downturn or other factors.

"Utah has always been willing to help people, but the concern has been not having the ability to manage the people or mitigate risk," Spendlove said. CMS under the Obama administration had told the state it would not allow it to expand Medicaid to less than 138% of the poverty line.

The bill also directs the state to come up with a way to encourage more Accountable Care Organizations, a voluntary federal effort in which associations of health care providers are eligible for bonuses should they lower costs and meet performance standards.

The Accountable Care Organizations are also a priority for the Trump administration. Health and Human Services Secretary Alex Azar said in a speech to the Federation of American Hospitals that the administration wants to expand the organizations as a way to move away from fee for service.

If approved, however, Utah would become the 34th state, including the District of Columbia, to expand the federal poverty program. About 12 million people have gained coverage through the expansion. But in those that have not, an estimated 2.5 million people fall into the coverage gap of making too much for traditional Medicaid and too little to qualify for Affordable Care Act premium subsidies, according to estimates from the Kaiser Family Foundation.