Utah’s Bad Medicaid Bet: Governor and Utah Legislators Relied on Trump Administration Promises that Didn’t Pan Out

What a mess. After repealing the ballot initiative passed by a majority of Utah voters that offered more affordable health coverage through a simple Medicaid expansion, Utah’s Governor and legislature substituted a law that creates a very complex Medicaid plan aimed at only people with incomes under about $12,000 a year.

As it turns out, a major problem with the new plan cooked up by the Governor and legislators was that, despite assurances given Utah from the federal Centers for Medicare and Medicaid Services, the White House ultimately decided not to approve its financing scheme. The issue in question was whether a state could receive the full enhanced federal matching rate (which will be 90% in 2020) while expanding only to the federal poverty line. The Obama Administration had already denied such a request from the state of Wisconsin, and the Trump Administration had turned down Arkansas and Massachusetts previously as well. However, the Trump Administration indicated they might revisit the question.

Utah is now left with a partial Medicaid expansion plan costing much more per person than any other state’s Medicaid expansion (except perhaps Wisconsin’s, which my colleague Joan Alker will be blogging about) while covering tens of thousands fewer of Utah citizens in need of affordable health care.

Making health care less available at a higher cost is an idea few taxpayers get very excited about, so why on earth would Utah’s Governor and legislature come up with such a plan? A major reason were assurances from the Trump Administration and the Administrator of the Center for Medicare and Medicaid Services, Seema Verma.

These federal officials, including Verma, repeatedly assured Utah’s Governor and legislators they would be able to get a special Medicaid financing deal not given to any other state that would permit them to cover fewer people than the law requires while still getting full financial support from the federal government. The message was “trust us and don’t worry.”

The special deal Utah was seeking, and Verma was offering as a possibility, was pretty simple.  Utah would only cover people needing Medicaid up to 100% of the federal poverty level, be able to deny needy people coverage at the discretion of the state, and still get the federal government to cover at least 90% of the costs. Utah’s wish was to offer 48,000 fewer people affordable health insurance through Medicaid but still get the same generous federal financing deal as states that had fully expanded Medicaid. The idea was that these people would get more limited plans in the federal marketplace, but not only would these be more expensive for these people, this would also be much more expensive for the federal government.

Utah’s Governor and lawmakers were told by Verma and other Trump Administration officials that approval of this special 90% federal financing deal through a federal Medicaid waiver was very likely.

Utah Senator Allen Christensen, another sponsor of the replacement bill in January, defended critics’ predictions that the federal government would never approve such a special deal (including my colleague Joan Alker back in March 2018):

On February 8, 2019 during the initial debate over repealing voter-passed Medicaid expansion and replacing it with the possibility of a special federal deal that covered fewer people, Utah Representative Jim Dunnigan said, “The main focus of the bill is to get the enhanced 90/10 match from CMS.”  This is of course exactly what didn’t pan out.

Other reports in February were even more clear:

“One Republican lawmaker involved in the planning for SB96 tells UtahPolicy.com that they met with a top official from CMS (The Centers for Medicaid and Medicare Service) two days before the start of this year’s session. During the meeting, they were told CMS is developing a “special waiver” for states to give them the 90/10 cost split if they implement limited Medicaid expansion, even if the plan includes caps or work requirements as Utah’s plan does. The lawmaker asked that we withhold their name.

Republicans say privately they’re extremely confident that Utah, and other states, will be awarded this new waiver sometime in the 12 months following implementation of their Medicaid expansion, allowing the 90/10 cost breakdown while giving health care to fewer people than the full expansion under Prop. 3.”

And again, press reports in March continued the theme of likely federal approval:

“Leading up to lawmakers’ passage of the plan, SB96, critics questioned whether the federal government would approve the waivers needed for Utah’s plan, while lawmakers said they had been given indications that the waivers would be approved. Approval for the first part of Utah’s program came Friday.”

And in St. George:

“That second waiver is expected to be a tougher request, since no other state has gotten approval to receive the increased federal money without fully expanding Medicaid. Lawmakers have said they have been assured that request will be approved….”

As late as May of this year Seema Verma was still sending strong signals that 90-10 match might be available to states – and not just Utah – who just did a partial Medicaid expansion:

“During a visit to Atlanta for a national health conference Wednesday, Verma told the AJC that when Georgia submits its application for a Medicaid waiver to cover some poor people who aren’t currently covered by Medicaid, the Trump administration is considering amping up the federal contribution to 90%.”

“That’s still under consideration,” she said. “We haven’t ruled it out.”

In the end, CMS was making a promise to Utah they couldn’t keep. Others in the Trump Administration perceived this approach as one which would prop up the Affordable Care Act and be at odds with their stated desire to have their entire Act declared unconstitutional. After all, the Trump Administration is currently arguing in federal court that the entire Affordable Care Act be repealed, including state Medicaid expansions.

Utah is now left holding the bag and paying 30 cents on the dollar instead of 10 cents on the dollar for those folks it is newly covering. The solution is to simply expand Medicaid as Utah voters intended – this would immediately save the state money and cover far more people. The ball is back in Utah’s court with a stinging reminder not to rely on the promises of the Trump Administration.

Adam Searing
Adam Searing is an Associate Professor of the Practice at the Center for Children and Families