Spendlove: The Next Steps on Utah Medicaid Reform

Spendlove: The Next Steps on Utah Medicaid Reform

 

The Next Steps on Utah Medicaid Reform
October 26, 2015

By Representative Robert Spendlove

Members of the House Republican Caucus met recently to review the latest proposal from the Governor and Legislative Leadership in the House and Senate to expand Medicaid to low income individuals in our state. While I commend the “Group of Six” for their work on developing the plan, ultimately I decided that I could not vote for the proposal. There are several reasons why I voted against it. The primary reason is I could not support a plan that was inconsistent with my values and objectives and I felt it shifted the balance of power too much toward the federal government over state government. However, I remain committed to finding a long term solution to Medicaid that truly reforms the system and represents the Utah way.

Overview of the Proposal

The latest proposal was called “Utah Access Plus”. It was very similar to the “Healthy Utah” proposal that was proposed during the 2015 Legislative Session, in that it extended coverage to those earning up to 138 percent of poverty through a subsidy for participants to purchase insurance on the private market through existing health insurance exchanges. There were a number of good components of the plan, including a requirement that people with employer based health insurance must stay on their existing plans. Also, for those whose incomes are above the poverty level there were a few measures to encourage healthy behaviors and mitigate negative impacts of people moving in and out of insurance on a continual basis.

However, the critical component of the Utah Access Plus proposal was the funding mechanism for the plan. One of the sticking points of Healthy Utah was there was no proposal of how to cover the $78 million annual cost that the State of Utah must pay to expand Medicaid. The Utah Access Plus plan proposed to cover the approximately $28 million of costs through existing funds available to the Department of Health. The remaining $50 million would be covered via a tax on the medical community in the state. Those who were proposing this plan argued that the $500 million of extra federal dollars that will come to Utah as a result of expanding Medicaid will essentially pass through the state and will flow to those in the medical community. Therefore, they proposed a “claw back” provision to bring back $50 million of revenue from the medical community. They argued that the net benefit would still be $450 million and thus the medical community would be better off.

My Concerns about the Proposal

When the plan was released to the public we experienced the problem of unintended consequences that often occurs in public policy proposals.

Unacceptable level of federal intrusion – My top concern about the Utah Access Plus proposal was the extent of federal intrusion into what is supposed to be a state program. I am a strong believer in federalism and that states are closer to the people they serve and thus better able to address the needs of their citizens than the federal government. The federal government too often imposes a “one-size-fits-all” model to programs, and Medicaid is no exception.

For instance, in Utah, the “coverage gap” of those who lack health insurance is comprised entirely of people living below the poverty line. These approximately 45,000 people were denied coverage due to a fundamental flaw in the way the Affordable Care Act was designed. In other words, a faulty design of the ACA is the reason the coverage gap exists. I am willing to find ways to help those in the coverage gap. They need our help. One of the fundamental jobs of government is to provide a safety net to those in need during times of extreme hardship. Those people in the coverage gap definitely need this helping hand.

However, the federal government has stated on several occasions that they are not willing to let us just cover the gap and help these 45,000 people in need. Instead, they insist that we must cover an additional 80,000 people who earn over the poverty level and already have access to subsidized health insurance through the federal exchange that covers their needs. There is NO POLICY ARGUMENT why the state should expand Medicaid beyond 100 percent of the federal poverty level. The only argument is that it is what the federal government is demanding and if we want their money we have to give in to their demands.

Cost Shift – One of the main objectives of the Utah Access Plus proposal was to shift the cost, and the responsibility of paying for the Medicaid expansion to those who directly benefitted from expansion. This clawback provision is a method often used as a way to mitigate the impacts of bringing in new revenue sources. If the proponents of Utah Access Plus had the choice, they would have narrowly tailored the proposal to apply only to those who directly benefit from Medicaid expansion.

However, the federal government again specifically prohibited Utah from narrowly tailoring the tax to those who directly benefit. Instead, they insisted that any tax must be applied broadly to the entire group of those in the medical community. Therefore, those who have virtually no benefit from expansion would still bear the additional costs of expanding Medicaid. This includes pediatricians, retired physicians, and those who provide community service at free health clinics, to name a few.

Uncontrollable Risk – As one of the best managed states in the country, we in Utah pride ourselves on being fiscally responsible. However, the federal government refused to allow us to design a program that was fiscally responsible, and one that mitigated risk and controlled costs. They specifically said that we could not include enrollment caps, spending caps, or any type of budgetary limits in our Medicaid expansion proposal.

The Utah Access Plus proposal tried to address this issue by shifting the risk of cost overruns to the medical community through the proposed tax. Unfortunately, this risk was more than those in the medical community were willing to assume. This is the reason the Utah Hospital Association chose not to endorse the Utah Access Plus proposal.

Again, this shows the fundamental difference between the federal government and the Utah state government. Where the federal government is able and willing to deficit spend and operate on borrowed money, the State of Utah must operate on a balanced budget. If enrollment goes above projections it is seen as a positive to the federal government. At the state level, enrollment above expectations causes cost overruns and must be mitigated through more tax increases or through diverting money from other parts of the budget. In Utah, where 56% of state funds go towards education, the only place where we could find additional revenue for Medicaid in the state budget is by taking money away from our school children. To me this is not acceptable.

What’s Next?

While I did not support the Utah Access Plus proposal that was presented to the Legislature, I remain committed to finding a solution that will reform our Medicaid system and make it more responsive to the needs of the people of our state. In fact, I am currently working on a bill for the 2016 legislative session that I feel will represent the Utah model for Medicaid reform.

The Utah Model – The first principle of the bill is that we as a state must define our goals and objectives, rather than letting the federal government define them for us. However, I recognize that Medicaid has been designed in a way that states must get funding from the federal government to operate. Ideally, I would support a block grant from the federal government with no strings attached. However, under the circumstances, I understand that we must operate within the current bounds of federal law. Therefore, my bill is contingent on the federal government granting the State of Utah the enhanced match rate of 90/10 federal to state cost sharing. This cost mechanism is consistent with what the federal government is currently offering to any state that expands Medicaid.

Cover the Gap – Second, my bill proposes to COMPLETELY FILL THE COVERAGE GAP, by expanding Medicaid up to 100 percent of the federal poverty level. Since the entire coverage gap is comprised of people earning less than the federal poverty level, there is no reason to expand beyond that level.

Control Costs – Third, my bill proposes to put recipients on traditional Medicaid, using a managed care model to control costs and realign incentives. One of the main causes of large cost increases in healthcare is the fact that there is an incentive to increase the number of services offered to a patient. This is called a “fee for service” model of care. My proposal is to expand the model of reimbursing based on the quality rather than the quantity of care a patient receives. It is something Utah helped pioneer a few years ago and it is an area where we should focus our efforts going forward.

Mitigate Risk – Fourth, my bill will include the ability to mitigate budgetary risk. This is done through enrollment caps, spending caps, and cost controls, such as more strictly enforcing reimbursement criteria. For instance, one good part of the Access Plus plan was that the state would not reimburse emergency rooms for non emergency expenses and it would not reimburse emergency transportation costs for non emergency uses.

Another idea Utah has been working on for many years is developing a prioritized list of services for those on Medicaid. Once the state reaches its budget limit it then ceases to reimburse for services beyond the preset limit determined. This is a method already in use in Oregon but the federal government has so far not allowed Utah to develop a similar model.

Include a Work Requirement – Fifth, the Utah Model of Medicaid reform should include a work requirement for those who receive coverage. Keep in mind that those currently in the Medicaid coverage gap are those who do not have disabilities. By definition, they are those who can work and should be working.

In the early 1990s, President Bill Clinton, working with a Republican Congress, was able to pass a fundamental restructuring of the US welfare system. At the time, welfare was on the verge of total collapse. Part of that welfare reform was a work requirement to qualify. It was a critical component to the success of the proposal because it helped people move through the transitionary period of needing government assistance. It is extremely important that Medicaid also help move people through the period of needing government assistance. It is not fair to them nor to society to use the power of government to discourage work through the public policies that are set.

Conclusion

I understand that what I am proposing as the Utah Model of Medicaid reform is not consistent with the expressed desires of the current Administration in Washington. However, we’ve spent too much time trying to design a reform model that they will approve. Instead of letting the federal government drive our public policy development process, we should develop our own process, working with our circumstances in mind. When our counterparts at the federal level are ready to work with us I am more than willing to work with them. However, they must recognize the vital role that states play in developing and implementing policy and they must stop viewing states as merely subcontractors who implement their policies without question.

Utah is a very unique state. Where others struggle, we get things done. Where others give up, we continue to work. I am confident that working together we can all find a solution to this generational issue. The people of Utah deserve not just any solution, but the right solution.

 

 

Thurston: Where Did the Coverage Gap Come From?

Thurston: Where Did the Coverage Gap Come From?

Where Did the Coverage Gap Come From?
October 27, 2015

by Rep. Norm Thurston

Have you stopped to wonder whether the coverage gap came from? Was it always here or did it suddenly appear? You may have heard some of my House Republican colleagues say that Obamacare created the Coverage Gap and wondered how that could possibly be the case.

When we say that the coverage gap was created by Obamacare we really mean it. Here is a little Utah insurance market history to clarify where the gap came from.

Before Obamacare became law in 2010, low income Utahns could buy inexpensive individual insurance policies on the open market, but they had to buy in while they were still healthy and continue to pay their premiums. Otherwise, it really wouldn’t be insurance, would it?

Those who had waited to buy insurance until they were sick were rightfully excluded from participating in the market, but they did have an option. They could buy in to HIPUtah, Utah’s “high risk pool.” This arrangement allowed them to join in by paying a higher price, which seems fair given that they hadn’t paid in while they were healthy, and protected the insurance market from moral hazard and higher premiums.

Of course, premiums in the high risk pool were higher than the regular market, but not as much as you would think. State tax funds were used to subsidize the premiums with the net result that premiums averaged about 25-50% higher than the market.

Furthermore, HIPUtah received millions in federal grants each year that were dedicated to low income populations to help keep the premiums affordable. In fact, when HIPUtah combined the state subsidies with the federal grants, the net premiums for people under 100% FPL were often lower than the regular market price.

Sounds like a pretty good deal, right? But that’s not all. It was fairly common for health care providers, churches and other charitable organizations to chip in to help cover premiums for people with immediate needs.

It was not uncommon to see an enrollment form come in with a check from a hospital for the first month’s premium. And that makes sense, too. A hospital system would much rather pay a couple months of insurance premiums to keep someone insured than provide uncompensated care.

So there was no real gap as a combination of private and public resources came together to take care of the most needy. Not that this was a perfect system, but it worked for Utah. It kept premiums in the market place low because people couldn’t sit out while they were healthy and jump in at the last minute when they wanted someone else to pay for needed care. It also provided a fair and affordable option for everyone that wanted insurance. Low income people, healthy or sick could find affordable insurance options.

But Obamacare did away with this Utah-grown system. Federally mandated community rating and guaranteed issue replaced the risk adjusted market (and premiums are still soaring). Federal grants were ended in order to fund other ACA priorities and ultimately HIPUtah was phased out. The last insured person’s coverage ended about a year ago.

If the truth were told, it was Obamacare that took away opportunities for low income people to take care of themselves, creating the coverage gap with no realistic, sustainable plan for providing an alternative for low income adults.

We did not create the gap. The ACA created it and provided no sustainable solution to cover it.

Next Up: Rep. Thurston talks about options for helping the most vulnerable among us without breaking the state budget

Op-ed: Hughes provides true leadership while Tribune lacks facts

Op-ed: Hughes provides true leadership while Tribune lacks facts

CLICK HERE TO SEE THE PUBLISHED OP-ED

Acting charitably is the Utah way. Our willingness to extend a helping hand is only curbed by our respect for fiscal responsibility. Without the latter, the former is unsustainable. True leadership recognizes this delicate balance and governs accordingly. That is why I’m proud of the leadership demonstrated by Speaker Greg Hughes. That is also why I’m proud of the careful consideration my House colleagues displayed in rejecting Medicaid expansion.

I was, however, surprised to see The Salt Lake Tribune — an institution that clearly understands the importance of living within its means given its recent layoffs — question Speaker Hughes’ leadership for doing precisely what the newspaper has done in the interest of long-term viability.

Even more surprising was the Trib’s apparent refusal to provide a factual basis for its conclusions, instead opting to use its word quota to attack people’s character and motivations. For those who prefer civil, fact-based dialogue to demagoguery, here are the key reasons House Republicans believe Medicaid expansion, as proposed, is a bad deal for Utah.

Of those states that have availed themselves of the “free” federal funds, enrollment is 91 percent higher than projected on average, with some as high as 200 percent above projection. Higher-than-expected enrollment translates to a higher-than-expected tab for states. When the federal government scales back federal funding for expansion in 2017, the financial albatross that is Medicaid expansion will either lead to tax increases or jeopardize other programs like education. And with congressional efforts to scale back enhanced funding for Obamacare expansion, there’s no guarantee the federal government will honor its already insufficient commitment long term.

Economics aside, Medicaid expansion (in the forms presented) is bad social policy. Obamacare precludes a state from implementing a work requirement for the able-bodied recipients of Medicaid expansion.

We are the Beehive State for a reason. Utah values hard work and industry — without them, this desert never blossoms into the rose it is today. Incentivizing people not to work has not only proven to increase unemployment and decrease income among populations, but it’s also a disservice to the very people these types of programs are designed to help.

Instead of reaping the benefits of full-time employment and distancing themselves from dependency, those who are able-bodied are further engulfed in a cycle of government dependency that often spans generations.

Of course, there are people that are genuinely in need. We have and will continue to ensure society’s most vulnerable are reasonably provided for. Paradoxically, however, the greatest threat to those who currently receive and most need government assistance is Medicaid expansion. Trying to do too much for too many people — without a reliable funding source — is the best way to ensure little to no healthcare for all.

Judging by its editorial, it seems the Trib’s definition of leadership is penning a fact-challenged editorial that recklessly tosses around words like “corrupt” and “bribe,” yet fails to offer substantive alternative solutions.

Utah’s House Republican’s brand of leadership, on the other hand, is adequately considering not only the short-term benefit of Medicaid expansion, but also the long-term ramifications of adopting an unsustainable model that could potentially create a bigger problem than the one it originally sought to solve.

I, for one, certainly prefer the latter type of leadership.

Brad Wilson is the House Majority Assistant Whip representing House District 15 in Davis County.

 

Media Advisory – Post Caucus Availability

MEDIA ADVISORY

October 13, 2015

 

UTAH HOUSE TO HOLD MEDIA ACCESS FOLLOWING CAUCUS MEETING

 

What: Brief update and Q&A for credentialed media regarding the House Republican Caucus discussion.

 

Who: Members of Utah House Majority Leadership.

 

When: Tuesday, October 13, 2015 following adjournment of the Majority Caucus meeting (approx. 6:45pm).

 

Where: Utah State Capitol, Room C445. Streamed live online at https://youtube.com/utahreps.

 

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State Leaders Announce Framework for Medicaid Expansion

FOR IMMEDIATE RELEASE

July 17, 2015

 

CONTACT:
Aimee Edwards
edwards@utah.gov
801.755.3085

 

Greg Hartley
ghartley@le.utah.gov
801.231.2756

Ric Cantrell
rcantrell@le.utah.gov
801.647.8944

 

STATE LEADERS ANNOUNCE FRAMEWORK FOR MEDICAID EXPANSION

 

SALT LAKE CITY – Utah State leaders announced today that they have found consensus around a conceptual framework for Medicaid Expansion.

 

The group has continued meeting since the close of the 2015 General Legislative Session to find a resolution to the ‘coverage gap’ created by Obamacare. The key principles they are working to address include coverage for those most in need, data accuracy regarding assumptions and projections, sustainability and protecting other critical areas of our state budget.

 

The framework of this proposal provides coverage for a population up to 138 percent of the federal poverty level utilizing the greatest return of Utah taxpayer dollars through the ACA. It protects the State from cost overruns through a formulaic funding model allowing providers and benefactors of Medicaid dollars to pay their share, and is sustainable for many years to follow.

 

Speaker of the House Greg Hughes said, “It is important that we develop a solution that is in the best interest of all Utahns.  If we can provide health coverage for those most in need while protecting other critical areas of our state budget, like public education, I believe we will have a model for other states to follow.”

 

“None of this process has been easy,” said Utah Senate President Wayne Niederhauser, “but the negotiations have been professional and pleasant. This agreement holds out hope that Utah’s compassion can harmonize with her common sense and be fiscally sustainable over the long term.”

 

Gov. Gary R. Herbert said, “I appreciate the process we have engaged in with House and Senate leaders in finding compromise on this important issue. There is still work to be done, but I believe we now have a framework in place that will provide care for Utahns most in need while being responsible with limited taxpayer funds.”

 

The group will meet with stakeholders and policy makers in the coming weeks. Once a formal draft is produced, they will identify specific dates for public hearings through legislative committees and a special legislative session.

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