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Medicaid Expansion Fact Check

Utah lawmakers voting to repeal Prop 3 claim that they have no other choice because the state cannot afford to expand Medicaid. Are their claims accurate?

Fact: This is not what the Governor’s Office of Management and Budget has estimated. Where is this $400 million number coming from? Over what time period? What assumptions does this projection makes about future revenues, offsets, etc? 

We cannot take this number at face value; we need to see the math behind it. 

The GOMB has only predicted there will be a shortfall of $10 million by 2021, and $65 million by 2024. This is not a lot of money for the state to budget around, especially for something as important as Medicaid.

Utah currently has a 1.3 billion dollar surplus. Meanwhile, the legislature wants to spend this surplus on a $225 million sales tax cut, which would be the largest tax cut in Utah’s history.

Fact: At the outset of any program, the legislature cannot guarantee that any law will cost what was projected. (Ex: Utah’s new state prison.)

The normal process to fund a program is to make sure it is fiscally solvent for the first few years, then monitor and reassess things that could be adjusted in the future. 

By the most conservative estimates, Prop 3 is fully funded for the first two years. During those two years, the state should closely monitor implementation and make adjustments as needed to ensure that moving forward, Prop 3 is fiscally viable. There are changes that can be made without cutting care.

(Ex: reducing provider rate increases, levying hospital assessment, floating sales tax, creating a Medicaid expansion rainy day fund.) 

Additionally, the Brookings Institution reports that “the leading peer-reviewed, academic study on this question documented, based on comprehensive data from the National Association of State Budget Officers that, by 2015, ‘there were no significant increases in spending from state funds as a result of the expansion.’”

Fact: Again, we have no evidence that the $400 million estimate is correct. 

To the larger point, it is absurd to assume Congress will go back on its commitments to nearly all the states. Remember: Obamacare repeal didn’t pass — it was politically untenable even with Republican majorities in the House and Senate and a Republican president.

The 90/10 match financing is built into the ACA. For the expansion population, this rate will not change. Otherwise, State Federal Medical Assistance Percentage (FMAP) rates fluctuate over time for a couple reasons. FMAPs are set by calculating state per capita incomes and comparing to national average. So if there is faster income growth in poor states relative to national average, their FMAPs will decrease. Utah’s FMAP has been more or less constant since 2011.

However, there IS a large risk that the state could end up paying a 30% match under Christensen’s bill because the federal government has never approved a state waiver for a plan with these requirements.

While Sen. Christensen’s partial Medicaid expansion plan could very likely have the state paying 3x as much to cover fewer individuals, full Medicaid expansion has a guarantee of a 90/10 match. Voters did not approve a sales tax increase to cover partial Medicaid expansion, and the sales tax increase was not designed to cover Christensen’s 30% match.

Fact: GOMB is not playing by its own rules here. First, simply refusing to comment on the fiscal soundness of a proposal is not a substitute for actual fiscal analysis.

GOMB is also applying a double standard. Any number of things could change beyond FY 2021 that could affect any of the policies Utah pursues today, not just Medicaid expansion. But when it reviews other proposals, it accepts this level of uncertainty without explicitly doubting their “fiscal soundness.”

You can’t apply one set of rules for analyzing Proposition 3 and another set of rules for everything else.

Fact: Christensen’s bill isn’t just Medicaid expansion ‘lite’– it’s not Medicaid expansion at all.

It would put health care at risk for more than 100,000 Utahns. It would mean people losing their healthcare after money from the sales tax runs out, due to enrollment caps. It would mean more spending for hospitals goes uncompensated. It would mean higher premiums for people in the individual marketplace.

The Legislature can balance the budget while implementing full Medicaid expansion! Utah voters made it clear that full Medicaid expansion is what we want our tax dollars spent on.

Fact: That question has been asked and answered by Prop 3. Instead, GOP lawmakers have manufactured a crisis to justify going back on this decision. They have fought tooth and nail to prevent full Medicaid expansion for 6 years.

In the words of Sen. Christensen, the bill sponsor, “Philosophically, am I opposed to full Medicaid expansion? The answer is yes.” 

Bottom line?

It’s not about the money.

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