To: Utah House of Representatives, Utah Senate,
Subject: MEDICAID EXPANSION UPDATE #9: The need for an alternative to the proposed Healthy Utah Plan
Date: Fri Jun 27 20:48:43 MDT 2014
Last weekend, the Deseret News published online a collection of nine opinion pieces making arguments for and against various Medicaid expansion plans, including the proposed Healthy Utah Plan. Included was an article authored by Sutherland Institute staff summarizing our concerns with Healthy Utah.
Additionally, just yesterday the Deseret News published an article by former-Sen. Dan Liljenquist articulating the fiscal concerns of Medicaid expansion that he shared with both the House and Senate majority caucuses last week. In our view, both of these perspectives support the conclusion that the true “Utah solution” will be found in an alternative to Healthy Utah which does not gamble the state’s ability to fund essential government services like education and transportation on an unsustainable federal funding stream in the form of Medicaid expansion funds.
At the conclusion of Sutherland’s opinion piece, we suggest a starting point for such an alternative path forward. We have included that article below.
Healthy Utah plan would hurt the most vulnerable Utahns
Good public policy requires three elements: doing the right things for the right reasons in the right ways. These elements are the difference between good policy and bad.
The proposed Healthy Utah Plan does some of the right things and for the right reasons. It seeks to help uninsured individuals acquire private health insurance (the right thing) for the sake of their own health as well as that of Utah’s economy (the right reasons). However, Healthy Utah would do this by pushing the most vulnerable Utahns further back in the health care access line.
It also relies on federal funding that cannot be sustained — jeopardizing funding for government services like education and transportation. You simply cannot do the right thing in the wrong ways and make good public policy.
Healthy Utah proposes to subsidize private health insurance for some 55,000 uninsured Utahns in the Obamacare “coverage gap.” In short, it takes them from the back of the line for access to health care and puts them at the front.
But what does that mean for the more than 300,000 low-income children, single parents and disabled Utahns — the most vulnerable of Utahns — who are on Medicaid now? A 2014 survey by Merritt-Hawkins, a national health care consulting firm, reported that on average, only 45.7 percent of physicians in metro areas across five specialties are willing to accept new Medicaid patients, due to low Medicaid payment rates and burdensome billing processes. So the most vulnerable Utahns already have substandard access to health care. Moving tens of thousands of uninsured Utahns ahead of them in line for access to health care (because private insurance pays doctors better than Medicaid does) is going to make their situation worse.
Healthy Utah proposes to mitigate the harm by letting uninsured Utahns bring family members who are now on Medicaid with them onto their insurance plan. But this is still likely to leave hundreds of thousands of disabled Utahns, low-income single parents and children behind in traditional Medicaid. It improves access to health care for uninsured Utahns only by taking it away from Utah’s most vulnerable people.
Healthy Utah relies wholly upon the federal government to fund its private insurance subsidies for the uninsured. That is not a good strategy for keeping important government services funded in a sustainable way.
Based on federal financial statements and the methodology used by the American Institute of CPAs, the federal government had a net accumulated deficit of $17 trillion in 2013. Throw in social insurance obligations (Social Security and Medicare) and the government’s financial obligations were just under $71 trillion in 2013. By comparison, the combined net worth of every household in America in 2013 was just over $80 trillion.
Not surprisingly, the U.S. Government Accountability Office has said “the current structure of the federal budget is unsustainable,” and the Utah Legislature’s fiscal analysts have noted that “massive federal debt suggests that at some point all states will have to take cuts to federal funds.”
Healthy Utah relies on this unsustainable funding to pay for health insurance for low-income Utahns. That is a bad gamble.
If the state takes that gamble, once the day of financial reckoning comes and Utah faces significant cuts in federal funding, it will have to choose among three unhappy options: (1) taking funding from education, transportation or other critical services to continue funding Healthy Utah, (2) cutting funding for Healthy Utah, or (3) raising taxes.
Utah’s position when that day comes will be bad enough, with the state already relying on the federal government to pay for 27 percent of the state budget.
Instead of worsening Utah’s financial position regarding federal funding through Healthy Utah, policymakers should instead seek ways to improve health care access for all vulnerable Utahns — both the uninsured and those currently on Medicaid — in a way that allows these Utahns to maintain health coverage even when federal funding is cut. Programs to help these individuals get into jobs with access to affordable insurance is a good place to start.
That kind of solution would do the right thing for the right reasons in the right way. That would be a true “Utah solution” to the problem of Medicaid expansion.
Director of Policy
Director of Public Affairs