- Utah has asked CMS to approve a Section 1115 demonstration waiver capping the growth rate of federal payments for its limited Medicaid expansion at the rate of medical inflation, rather than the usual (and much lower) rate of consumer price inflation.
- The formal request, filed Friday, asks CMS to pay the full 90% matching rate under the Affordable Care Act for Utah's partial Medicaid expansion to adults with incomes up to 100% of the poverty line, instead of the 138% rate used by other Medicaid expansion states. CMS has never approved such a request before.
- The proposal includes a request that Utah also be able to cap enrollment based on state funds. The state wants to implement the five-year demonstration program as soon as it has been approved by CMS and is targeting an October rollout date.
Conservative proponents of work requirements argue they set low-income Americans on the path to gainful employment and prosperity while decreasing the burden on federal entitlement programs.
"This demonstration will allow the State to test the effectiveness of policy that is designed to improve health outcomes of demonstration individuals, as well as promote their financial independence," Utah's letter reads.
But Utah's plan, which applies to adults under the federal poverty line, would leave scores of near-poor Americans without coverage, or with less affordable coverage than under a full expansion, according to the Center on Budget and Policy Priorities.
The western state wants CMS to set a per capita spending cap above the traditional matching rate of roughly 70%. The cap would be different for adults with dependent children, those without dependent children and people in treatment for substance abuse.
The state proposed a 4.2% growth rate for the first two years of the demonstration, based on CMS projections of medical consumer price inflation. This would be adjusted over subsequent years.
Utah is blaming skyrocketing Medicaid spending for the caps. "With Medicaid continuing to consume a growing share of Utah's General Fund, the State's ongoing fiscal sustainability is dependent on finding fiscal sustainability for Medicaid," the letter reads.
A recent HHS Office of the Actuary report projected Medicaid expenditures to grow at an average annual rate of 5.7% over the next decade, faster than the gross domestic product.
Under Utah's proposal, CMS would pay a fixed amount per beneficiary per month. However, the payment structure could spark worries among providers and patient advocates. Setting payment caps isn't an exact science — the state could end up needing significantly more if struck by natural disaster, a public health emergency, regulatory changes or an economic recession. When states hit their federal spending cap, they may have to cut benefits, raise the bar for Medicaid eligibility or roll back care for the country's most vulnerable citizens.
Higher barriers to care could also hit struggling hospitals, especially safety net institutions that rely on uncertain Medicaid funding.
Utahns voted for full Medicaid expansion in November, which would grant the state ACA's enhanced match to cover every citizen who's eligible. However, Republicans in the legislature overruled the ballot measure in March, passing instead a partial expansion for adults up to 100% of the poverty line and cutting the eligible population roughly in half.
The state's initial waiver, which was enacted in April, also included a work requirement and a cap on federal payments to the state. Friday's sequel pares back even more of the protections for low-income Americans through the per capita spending cap, along with a six-month lockout period for people who intentionally misrepresent their eligibility for Medicaid.
Another wrinkle in the Utah plan, spearheaded by Republican Governor Gary Herbert, is a requirement that adults with incomes under the federal poverty line apply to a minimum of 48 jobs to be eligible for health insurance under Medicaid — even if they're already working 29 hours a week — if they don't meet a set of exemptions.
A health policy researcher with George Washington University call this provision "weird" on Twitter.
So far, CMS has approved waivers for Utah, Arkansas, Indiana, Arizona, Ohio, New Hampshire, Michigan and Wisconsin. It's reviewing waivers from Alabama, Mississippi, Oklahoma, South Dakota, Tennessee and Virginia.
Arkansas' work requirement program, instituted last year, has led to more than 18,000 people going off the program for non-compliance or lack of reporting. Experts expect that figure to grow.