Report: Medicaid expansion comes with 'significant' costs to taxpayers

SALT LAKE CITY — No matter how it's sliced or diced, Medicaid expansion will cost the state and taxpayers, but it might also provide a savings for at least a few years and serve as a boost to the local economy.

The financial details were part of a long-awaited report, highlighting the costs and benefits of Medicaid expansion in Utah, released Thursday by the Utah Department of Health.

The report shows a savings of up to $23 million in the first three years of implementation, but a $324 million cost after 10 years, according to one scenario that would expand current Medicaid benefits to adults up to 138 percent of the federal poverty level.

The report outlines significant costs to the state for all models into perpetuity, regardless of what the federal government has said it would contribute.

"We're looking at how to address the needs of the uninsured in Utah. That's been a goal for over a decade," said Dr. David Patton, health department director.

Patton said expanding Medicaid would make it available to an entirely new population, whereas, up to its current fulfilment, it has been an entitlement program for children, the poor and disabled.

Data contained in the report will be used by the governor's Medicaid Expansion Options Community Workgroup, which is meeting throughout the summer to determine the feasibility and type of expansion to employ — or not — in the coming years.

The group will provide a recommendation to the governor, who is expected to make the final decision on expansion, following financial approval and input from state lawmakers.

Gov. Gary Herbert said he will focus on "the total cost to taxpayers," calling the report released Thursday just "one part of the overall review and analysis."

"In this decision, we are striving to find the best way to serve the people of Utah and the best way to achieve quality health care outcomes," he said.

Boston-based Public Consulting Group was commissioned by the Utah Department of Health to compile the report, which was originally expected prior to the Legislative session this year.

The 143-page report models the costs and benefits of five different Medicaid expansion scenarios, including four optional expansion scenarios in addition to the mandatory changes to Medicaid required by the Patient Protection and Affordable Care Act to take effect in every state in January.

"The bottom line is that each and every scenario comes with significant costs to the taxpayer," Patton said. "But there are also benefits, both human and financial, and we must remain focused on finding the best way to deliver high-quality, affordable health care to Utahns."

Mandatory expansion will extend coverage to approximately 60,202 uninsured adults and children, some of whom are already eligible but not enrolled in the program for one reason or another. The law eliminates an existing asset test and increases income requirements for certain individuals.

The report states that despite savings in the beginning years, expanding Medicaid would result in overall costs to the state.

In scenarios projected over the next 10 years, costs for mandatory expansion would reach $762 million in state and federal dollars, with $213 million coming from the state. Full expansion — extending benefits to 123,568 adults up to 138 percent of the federal poverty level — could reach $3.2 billion in implementation costs, with $260 million paid by the state, according to the report.

Costs, borne mostly on the administrative level, are expected to increase as promised federal reimbursement declines from 100 percent to 90 percent over 10 years. If the match rate changes beyond that, a provision in the law allows states to opt out altogether.

Matt Slonaker, Medicaid policy and collaborations director for the Utah Health Policy Project, an advocacy group for uninsured Utahns, said he believes the projected enhancement of savings and economic activity of Medicaid expansion would "dwarf" any investment while also providing coverage for more than 100,000 Utahns in need of health care.

"The question of expanding Medicaid is simple," he said. "Do we want to make health care more affordable for Utah workers and their families, or are we going to continue to ask a family that earns $30,000 a year to do the impossible and pay $15,000 for private insurance?"

Committee member and community advocate Pamela Atkinson said she's optimistic that costs would decline over time as people are able to visit the doctor more often.

Her hope is validated by the report's indication that individuals with health care enjoy an increased quality of life and a greater life expectancy by at least a year.

Vaughn Davis, who chairs the consumer advisory board and was a former patient at the charity-based Fourth Street Clinic in Salt Lake City, said, "For many of us, regular health care visits were the first step in moving out of homelessness."

Waiting to get access to Medicaid, he said, leads to some losing unhealthy body parts, but also their dignity "as they slowly become disabled and eligible for Medicaid."

"We just want to be able to see a doctor when we are sick … and our only path is with Medicaid," Davis said. "There are no other options for us."

Expanding Medicaid is also projected to save hospitals, clinics, pharmacies and other medical facilities hundreds of thousands of dollars lost each year to unpaid claims.

The report indicates that full expansion would lead to an economic boon, resulting in new jobs in a variety of health and retail sectors and increased tax revenues to state and county governments, which would no longer be required to cover mental health and substance abuse treatment for inmates.

Mandatory expansion would likely generate $516 million in economic impact and create 747 new jobs in the state. Full expansion, beyond mandatory federal requirements, is projected by the consulting group to possibly generate $2.9 billion statewide and create 4,160 new jobs.

The full report, including analyses for each scenario, is available at www.health.utah.gov.

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