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CMS Denies Obamacare Funding for Partial Medicaid Expansion in Utah

August 19, 2019

The Centers for Medicare and Medicaid Services (CMS) turned down a first of its kind request to provide 90 percent funding for expanding Medicaid to able-bodied adults

with incomes up to 100 percent of the poverty level, not 138 percent as required by Obamacare.

Utah made the request during its most recent legislative session after voters approved full expansion in November. North Carolina and Georgia have also been considering an appeal for a limited Medicaid expansion. 

CMS informed Utah of its decision July 29 and released a statement which read in part, “CMS has long supported state flexibility to design innovative Medicaid demonstrations that improve outcomes and promote fiscal sustainability. However, a number of states have asked CMS for permission to cover only a portion of the adult expansion group and still access the enhanced federal funding available through Obamacare. Unfortunately, this would invite continued reliance on a broken and unsustainable Obamacare system.”

        The idea behind a partial program was to reduce the fiscal bite of expansion. The Utah Governor’s Office of Management and Budget and the state’s Legislative Fiscal Analyst said full Medicaid expansion would cause a $47 million deficit in fiscal year 2023 and a shortfall of $83 million in FY 2025.

False Lure of Expansion?

To entice states to expand their Medicaid programs, the federal government offers to pay 90 percent of the costs, but opening up eligibility has been more expensive than states anticipated, says Matt Glans, a senior policy analyst at The Heartland Institute, which publishes Health Care News.

“Medicaid is, both in its current and likely future forms, an unaffordable boondoggle that has placed a growing burden on both state and national budgets,” said Glans. “Medicaid rolls have continued to expand much faster than many states can handle.”

From 2013 to 2015, the number of Medicaid enrollees increased 28 percent, costing $581.9 billion in 2017 alone, and the Centers for Medicare and Medicaid Services predicts annual enrollee growth of 5.7 percent, says Glans.

“That rate far exceeds annual U.S. gross domestic product growth,” said Glans. “States cannot count on the federal government to provide funds in the long term. All it takes is a change in leadership to dismantle any funding mechanism, leaving state taxpayers on the hook for Medicaid expansion.”

CMS Reversed Course

Utah state Sen. Allen Christensen (R-Ogden) said he was surprised by the CMS decision.

“We had been receiving assurances for the past year we’ve been working on this, that it was going to be approved,” said Christensen. In March, CMS approved Utah’s request to limit income eligibility, implement a work requirement and cap the program if  it got too large. Utah still needed to submit a formal waiver request and had been planning to do so, August. 

      In any case, he would like to see specific objections in writing from CMS, he says.

“Other items we have requested in the past have taken a long time,” said Christensen. “We have one out that has been over a year, now.”

Backup Plan in Place

Utah lawmakers anticipated the denial of federal Obamacare co-funding for partial expansion and set aside money to cover to expansion of the program under a 70 percent reimbursement level until 2020, says Christensen. Lawmakers will have 45 days in their 2020 legislative session starting in January to decide how to fund the program beyond that.

Christensen says he wants to see how the Fifth Circuit Court of Appeals will decide on a Trump administration-backed lawsuit to overturn Obamacare (see page 22).

“It has been expressed to us that they [the Trump Administration] wouldn’t want to influence how that suit comes out by making a formal decision on our waiver request,” said Christensen.

An unnamed CMS spokesperson told The Hillon July 27, “CMS will continue to only approve demonstrations that comply with current policy.”

 

AnneMarie Schieber (amschieber@heartland.orgis managing editor of Health Care News.

 

Official Connections:

Utah state Senator Allen Christensen (R-Ogden)

https://senate.utah.gov/allen-christensen

Author
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.
amschieber@heartland.org @HCPolicy