Understanding the House Proposal on Medicaid Reform
We’re in the last week of the annual legislative session and as expected, Medicaid reform has dominated much of the discussion this year. I have received many questions and comments about the competing plans being considered by the Legislature. I am going to provide an overview of each plan and then explain my position on the issue.
Overview of Legislation Currently Under Consideration
SB 164 – Healthy Utah 2.0
Note: This is the overview of the bill as prepared by the proponents of Healthy Utah. I prepared this overview by combining the long title of the bill with a handout given at the committee hearing where the bill was debated.
- Authorizes the Department of Health and the Governor to negotiate a Medicaid waiver to expand healthcare access to certain adults earning between 0-138 percent of the federal poverty level
- Requires the state Medicaid waiver to meet certain conditions, including notifying enrollees that the expansion is a two year pilot program
- Sunsets the Medicaid expansion in two years and requires a legislative review regarding:
- The percentage of participants employed, in training, or participating in a work search program
- Program enrollment categorized by employer sponsored plans, premium assistance, medically exempt, and annual cost per enrollee
- Requires further review and approval by the Legislature if HHS changes the waiver in any way
- Immediately repeals the Medicaid waiver if federal funds are reduced
- Provides Medicaid benefits through a premium subsidy of private insurance rather than through the traditional Medicaid plan
- If an individual is offered employer sponsored health insurance, they must enroll in that insurance rather than in Medicaid
What it does:
- Fully prepays for the entire pilot program through a combination of cost savings, efficiencies, and one-time money
- Costs $25 million total in state funds over the two year period
- Is in effect from July 2015 to July 2017 and includes an iron-clad termination provision
- Includes triggers that guarantee full match rates from the federal government
- Covers up to 126,000 people in FY 2017, making it by far the most effective use of Utah dollars
- Represents a 37 to 1 return on investment while providing health coverage to many more individuals than other proposals
- Provides certainty in the short run while allowing Utah to fully reconsider its healthcare options in 2017
- Allows the state to continue negotiating with HHS for additional waivers
What it doesn’t do:
- Does not raise taxes
- Does not create a dedicated new revenue stream to fund an ongoing program
- Does not lock the state into a new open-ended welfare program
- Does not open the state to unforeseen financial risk
- Does not leave tens of thousands of Utahns without health insurance due to the flaws of Obamacare
HB 446 – Utah Cares
Note: Again, this information is consistent with the long title of the bill and with information that was distributed to members of the House of Representatives.
What Does it Do?
- Removes the enrollment cap on the Primary Care Network (PCN) and offers coverage to all adults in the coverage gap (earning below 100% of the federal poverty level)
- Expands traditional Medicaid to some adults without dependent children living in poverty
- Expands traditional Medicaid to more parents of dependent children living in poverty
- Provides financial stability and flexibility for the program by allowing adjustments, based on program costs and the budget target
- Instructs the Utah Department of Health to continue negotiations with the federal government to gain greater flexibility for any future Medicaid expansion
- The State commits to spend approx $32 million per year
- Primary Care Network – $5 million
- Traditional Medicaid – $25 million (can adjust based on financial circumstances, which allows for extensive flexibility)
- Administration – $2 million
- This spending will be matched at a 70/30 rate by the US Department of Health and Human Services.
Benefits of the Program:
- Offers safety net coverage to all people living in poverty
- Expands traditional Medicaid using a managed model of care
- Is fiscally responsible, since it allows the state to control costs and mitigate risk
- Is sustainable in the long term, rather than ending in two years
- Allows us to keep the promises made to those in need
- Helps those most at risk, rather than providing double coverage to those who don’t need it
- Not based on the Affordable Care Act, based on the traditional state/federal cost share
- Does not leave tens of thousands of Utahns without health insurance due to ACA flaws
- Everyone eligible with Healthy Utah is eligible with Utah Cares – 126,000 by 2017
- PCN covers the following at a value of approx $220 per month
- Primary care physician visits – $3 copay
- 4 prescriptions per month – $3 copay
- Dental exams, cleanings, fillings, routine x-rays, tooth extractions – no copay
- Immunizations – $3 copay
- Eye exam – no copay
- Laboratory services – no copay
- X-rays – no copay
- Medical equipment and supplies – no copay
- Ambulance and ER for diagnosed emergency – no copay
- Adds psychiatrist and some mental health providers as primary care providers
Overview of Legislative Process Surrounding Medicaid Reform
Much of the debate about Medicaid reform this year has actually been about the process, not as much about the policy involved. Therefore, I want to shed some light about the process these competing bills have gone through and what to expect in the final few days of the 2015 Legislative Session.
SB 164 – Healthy Utah
- SB 164 is a Senate bill, sponsored by Sen. Brian Shiozawa.
- It was debated in the Senate Health and Human Services Committee where it passed with 4 votes in favor, 1 against, with 1 being absent.
- After the bill passed out of committee, Sen. Shiozawa substituted the bill with a new version of the proposal. The substitute bill eliminated many parts of the original Healthy Utah proposal. This is where the proposal was changed from a long term program to a two year limited program with a defined sunset date. It also eliminated the long term funding mechanisms for the proposal, since it contains the automatic sunset.
- The substituted bill was debated by the full Senate, where it passed with 17 votes in favor, 11 votes against, with 1 person absent.
- While the Speaker of the House made statements about the level of support of SB 164, when the Senate sent the bill to the House for consideration, it was immediately sent to the Rules Committee, where members of the committee recommended it go to the House Business and Labor Committee. This unanimous vote in the Rules Committee is important because all Democrats on the Rules Committee agreed that the Business and Labor Committee was the most appropriate committee to consider the bill.
- SB 164 was debated by the House Business and Labor Committee. This debate lasted about an hour and a half and included extensive public comments. To put this in perspective, it is rare for bills, even very controversial ones, to be discussed in committee for more than 30 to 45 minutes. After this lengthy debate and discussion, SB164 failed to pass out of the committee, with a vote of 4 in favor of passage, 9 against, with 1 being absent.
- The day after the House Business and Labor voted against passing SB164, some members of the House tried to revive the bill by pulling it back out of Rules and sending it to the full House of Representatives for further review and debate. I voted against the motion since I felt it set a bad precedent for bills to follow. Every legislative session many bills fail to pass in committee and it is inappropriate for the entire House to ignore the work of the committee and bring a bill to the floor.
- Some members of the House tried again to revive the bill the following day by substituting it into the competing bill sponsored by Rep Dunnigan. I voted against this motion since I feel HB 446 is a better mechanism to reform Medicaid and since this substitution would have killed the bill and essentially ended any Medicaid reform efforts in the state this year.
HB 446 – Utah Cares
- This is a House bill, sponsored by Rep Jim Dunnigan.
- It was debated in the House Business and Labor Committee, in the same meeting where SB 164 was debated. It received a similar public hearing to SB164 and passed out of committee with 9 votes in favor, 4 votes against, with 1 person absent.
- Since this bill passed out of committee with a favorable recommendation, it was debated on the House floor and passed out of the House with a vote of 56 in favor, 18 against, with 1 person absent. I voted in favor of this bill.
- The bill has been sent to the Senate for further consideration.
My Position on This Issue
As I have said many times, I am working toward a consensus approach toward reforming our state’s Medicaid program. This is one of the most important issues the Legislature will consider this session and this is one of the most important decisions legislators will face.
Many people have asked me about how I came to my position on this issue, especially because of my active participation in the development of earlier plans. I have been actively involved in this process since the beginning. I was intricately involved in developing options to address the coverage gap.
The components I feel must be included in any plan on Medicaid are:
- It doesn’t remove coverage for those in need
- It mitigates risk to the state budget
- It can be approved by the federal government
The benefits of HB 446 over SB 164 is it addresses my concerns while still providing a good safety net to those in need.
First, it expands the existing Primary Care Network to those living in poverty. While this plan is not comprehensive, it provides a basic level of care to those in need. By covering things such as primary care physician visits, 4 prescriptions per month, dental benefits, eye exams, ER coverage, and mental health coverage, this plan helps prevent people living in poverty from falling through the cracks. My own family and friends who live at or near poverty would greatly benefit from this level of coverage, and this is something my wife and I would have appreciated when we were a young married couple with two kids and little income. This safety net could be absolutely life altering for many in this group.
Second, by focusing the expansion of traditional Medicaid on those at the lower end of the income range, the plan addresses those who are most vulnerable and in need of care. This is also done through the managed care model of Medicaid coverage, which ensures these people receive a higher level of care for their needs.
Third, this plan ensures that everyone in the coverage gap is eligible for health coverage. In fact, everyone covered under Healthy Utah is covered under Utah Cares. This amounts to 126,000 people. This is done through a combination of traditional Medicaid, the expanded Primary Care Network, and the federal health exchange coverage for those above poverty.
Fourth, the Utah Cares plan contained in HB 446 is sustainable in the long term. This is possible through the ability to adjust the percentages of income where the state is expanding traditional Medicaid. This amount can be adjusted on an ongoing basis, depending on our ability to fund the program. Therefore, the state can target a specific budget amount on an annual basis and can stick to that budget target. This, in turn, allows the state to control costs and mitigate risk in the program.
Lastly, the Utah Cares plan has a high probability of being approved by the federal government. I participated in a conference call between members of the Utah Legislature and representatives of the US Department of Health and Human Services a few weeks ago. In that conference call, not only did the HHS representatives indicate a willingness to approve this approach to expand Medicaid, they actually recommended this as the best model to address our concerns while providing help to those in need.
We still have a few days left in the 2015 legislative session. By law, we must adjourn for the year by midnight on Thursday, March 12. There will definitely be further negotiations on this issue. I’ve heard a few ideas about how the two bills could be combined, with something similar to Healthy Utah leading into something similar to Utah Cares. While this idea is still very conceptual, it is potentially something I could support, as long as the pathway is clearly defined and as long as all sides agree to prevent any deviation from this agreement.