Analysis: Medicaid expansion would save Utah millions, cover 123K uninsured
Affordable Care Act • Report says partial expansion, or none, would cost Utah millions.
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Utah could save $131 million and extend health insurance to more than 123,000 of its uninsured residents over the next 10 years if state officials opt to fully expand Medicaid, according to a cost-benefit analysis released Thursday.

If Utah chooses not to expand, however, Medicaid will cost the state $177 million due to increased enrollment as those who are currently eligible, but not enrolled, are spurred to seek coverage.

Under the Affordable Care Act (ACA), virtually everyone must have health insurance come 2014 and Medicaid is a path states can use to extend coverage to the poor or uninsured. Full expansion would provide coverage to all individuals with incomes at or below 138 percent of the poverty level, or $15,281 a year for a one-person household.

The 143-page report from the Boston-based, nonpartisan Public Consulting Group (PCG) examines the impact of state's multiple options: no expansion, full expansion and three partial expansion proposals.

PCG analysts make no recommendations, but Gov. Gary Herbert is expected to weigh their findings in reaching his decision on the expansion.

"My focus is the total cost to Utah's taxpayers — not just the state cost, not just the federal cost, not just economic modeling," Herbert said Thursday in a prepared statement. "The PCG report is one part of the overall review and analysis. In this decision we are striving to find the best way to serve the people of Utah and the best way to achieve quality health care outcomes."

Utah is one of a handful of states that are still undecided. The federal Health and Human Services department has set no hard deadline, but Utah risks losing millions in funding if its determination lingers past the fall.

Currently, Utah pays about 30 percent of the costs for residents on Medicaid. The remainder comes from the federal government. Under the ACA, the feds will pay 100 percent of the costs of those added to expanded programs for the first three years. After that, Utah will have to pay its share for those new enrollees, but the law caps state obligations at 10 percent.

Utah's Republican-controlled Legislature has emphatically opposed an expansion, citing concerns over costs and doubt about the federal government's ability to make good on its financial promises in the future.

Advocates for the poor and uninsured favor expansion and on Wednesday said the report seems to quiet state concerns that Utah can't afford it.

"Now we're back to a values question," said Lincoln Nehring, health policy analyst at the advocacy group Voices for Utah Children. "The state can't now say it can't afford it, so what are our values? Do we want to provide health care for 123,500 individuals or not?"

Advocates, lawmakers, business leaders and health care providers on the governor's Medicaid Expansion Work Group got a first look at the report at a meeting on Thursday. The group has have been tasked with exploring options outlined in the report — and alternatives, including charity care — and sharing its findings with Herbert.

According to the PCG report if Utah does nothing Medicaid will still swell by 60,202 currently eligible but not enrolled children and some adults. The report calculates that will cost Utah about $213 million over 10 years, although the amount should be offset by about $36 million in state and county tax revenue generated by the new enrollees' health spending.

Partial expansion proposals would also cost the state money because the federal government would pick up less of the tab.

Full expansion would add 123,586 adults to the program and would cost Utah an estimated $260 million. However, offsets in tax revenue and savings to state and federal aid programs whose clients would become eligible for Medicaid would total $391 million, netting the state $131 million in savings.

In addition, analysts project full expansion could bring Utah hospitals and community health centers a combined savings of about $816 million due to a drop in need for charity care.

Both full expansion and no expansion scenarios project a boost to Utah's economy, including the creation of new jobs. Without expansion the projected economic benefit is about $516 million. A $2.9 billion economic lift,and 4,160 new jobs, are projected under full expansion.

Committee members had questions for state health department staff and challenged some assumptions used by the analysts. Rep. Jim Dunnigan, R-Taylorsville, asked how the $3 million annual cost of the Utah High Risk Pool, coverage for ill residents uninsurable in the current private market, can be included as a projected $10 million in savings over the next three years — since it is set to expire in mid-2014.

"That's off," said Dunnigan, an insurance broker who also co-chairs the Legislature's Health Care Reform Task Force. "We're not going to have $10 million in savings ... that's not there."

The report is based on models that necessarily rely on assumptions, most of which health officials and PCG analysts agreed upon, said Robert Patton, executive director of the state health department, after the meeting. The report is a place to begin a conversation, he said.

"All of this will depend on people's behavior," Patton said.

It's unknown how many people will seek Medicaid benefits. Projections in the report suggest the so-called "take up rate" of between 48 and 71 percent of all those eligible — the majority in 2014.

Reading from a letter, Vaughn Davis, chair of a consumer advisory board for the Fourth Street Clinic, asked for compassion. The clinic provides care primarily for the homeless population.

"For each of us, regular health care visits were our first steps in moving out of homelessness," said Davis, noting that some people die while waiting to be approved for Medicaid services. "Sadly, death qualifies as a disability, so when our friends die, their wait is over as their Medicaid application is automatically approved ... As you work together on this issue, we ask that you remember our lives."

jdobner@sltrib.com

Twitter: @jenniferdobner —

To expand, or not to expand

A Utah study of the costs of expanding Medicaid looked at five scenarios. Each requires an up-front investment by the state. But expanding Medicaid will, over 10 years, save money. Not expanding or partially expanding, on the other hand, will cost money.

No expansion

Even if Utah chooses not to expand Medicaid, the low-income health program will grow over the next 10 years by 60,202 children and adults who are currently eligible but have not enrolled.

$213 million - state investment

($36 million) - new state and county tax revenue

= $177 million - total cost to state

_________

Full Expansion

Expanding Medicaid up to 138 percent of federal poverty would, over 10 years, cover 123,586 adults.

$260 million - state investment

($188 million) - savings in state and county aid

($203 million) - new state and county tax revenue

= ($131 million) - dividends reaped

__________

Full Expansion, partial benefits

Expanding Medicaid up to 138 percent of poverty, but with pared down benefits, would cover 123,586 adults by 2023.

$219 million - state investment

($188 million) - savings in state and county aid

($154 million) - new state and county tax revenue

= ($123 million) - dividends reaped

________

Partial Expansion, full benefits

Expanding Medicaid up to 100 percent of poverty with full benefits would cover 59,983 adults by 2023.

$403 million - state investment

($76 million) - savings in state and county aid

($73 million) - new state tax and county revenue

= $255 million - total cost to state

_________

Partial Expansion, partial benefits

Expanding Medicaid up to 100 percent of poverty with pared down benefits, would cover 59,983 adults by 2023.

$334 million - state investment

($76 million) - savings in state and county aid

($141 million) - new state and county tax revenue

= $116 million - total cost to state

___________

Editor's notes: The "state investment" includes administrative and direct services costs. Pared down, or partial benefits, is allowed under the Affordable Care, but only for certain populations.

Sources: State of Utah Medicaid Assessment by Boston-based Public Consulting Group; and Congressional Research Service