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In line with his focus on job growth, Gov. Gary Herbert is looking to inject $6.5 million into the University of Utah's medical school.

Announced Monday at the unveiling of his 2013 budget recommendations, the money would serve as down payment on the university's $12.2 million plan to add 20 new medical school slots over two years.

An expansion is needed to backfill seats lost to federal cuts and ease a nationwide shortage of primary care providers, said Herbert.

The governor's spending plan also includes $1.3 million for the U.'s Huntsman Cancer Institute and calls for extending Medicaid to inmates, shifting the $2 million cost now borne by the state onto the feds.

But Herbert disclosed little else new on the health policy front.

He's asking for $57.2 million to cover anticipated growth in the low-income health program Medicaid and $2.2 million for the Children's Health Insurance Program (CHIP). And he's setting aside $9 million to fund a Legislature-driven health reform experiment to move some Medicaid recipients into managed care networks known as Accountable Care Organizations (ACOs).

If approved by the federal government, the experiment would pay ACOs a lump sum per patient. Any losses at the end of the year would be absorbed by the ACOs, which would also share in any leftovers.

It's an alternative to the conventional fee-for-service arrangement, which encourages over-treatment and over-spending, said Herbert, who voiced continued frustration with national health reform and pledged to continue lobbying for flexibility to spend federal health dollars at Utah sees fit.

Advocates for the poor are generally pleased by the recommendations, but are angling to use some of this year's $280 million surplus to restore dental services.

"Putting off [dental] last year may have been the lesser evil when compared to massive cuts. But now is the time to bring Medicaid and CHIP funding up to date so that the programs are in a strong position going forward with the transformation to accountable care," says Jason Cooke, Medicaid policy director at the Utah Health Policy Project.

But Herbert said Medicaid already consumes 17.6 percent of the state's budget, hurting its ability to fund other critical services like education.