Adding Up the Costs: Utah’s Latest Waiver Requests Would Likely Result in Loss of Medicaid Coverage for Thousands of Low-Income People

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In March, the federal government approved a waiver request from Utah, giving the state permission to implement work-related requirements in its Medicaid program. The policy has already been shown to be problematic in Arkansas, keeping thousands of people who need health care coverage from receiving it. Moreover, in addition to clearing the work-related requirements, Utah’s approved waiver gave the state authority to limit the number of qualified people it enrolls in the program (i. e. , capped enrollment).

In recent weeks, the state released a draft of a new waiver request that could lead to significant losses of Medicaid coverage, if approved. Here is what the state intends to ask from the federal government:

• Permission to impose per-person dollar limits (or per capita caps) on Medicaid spending for certain groups. Under this policy, the state would receive a fixed dollar amount per certain enrolled beneficiaries. The federal government would pay per beneficiary costs up to the amount of the cap, and then if costs exceeded the total cap amount for the enrollment group the state would receive its typical lower Medicaid match rate, leaving the state at greater financial risk for costs that exceed the federal limit. At that point, it is likely that the state would begin capping enrollment in order to limit its financial exposure (see below). The current waiver only seeks to cap spending for a subset of enrolled adults—expansion adults without dependent children, low-income parents, and a targeted group of adults including those needing substance use treatment. This policy is a very slippery slope, which could lead to capped spending for all populations over time—including older adults, people who need long-term services and supports, and people of all ages with disabilities.

• Approval to incorporate the work-related requirement—approved in the March waiver—into the current waiver request. We described the work-related requirement more fully in an earlier blog post. Individuals who do not meet work-related requirements face having their Medicaid coverage terminated. Approval to incorporate approval from the March waiver—to limit the number of qualifying individuals it will let into the program (e.g., cap enrollment)—into the current waiver request. The goal of this policy is to deny coverage to otherwise eligible individuals when projected costs exceed annual state appropriations. The state would have discretion to decide how many people it would cover based on available funding. Enrollment caps that limit eligibility under Medicaid in this way are unprecedented and are not consistent with the Medicaid statute.

• Approval to receive the enhanced federal matching rate for a partial coverage expansion. The state received federal permission to expand coverage for a portion of its low-income adult population—those with income at or below the federal poverty level—in the waiver request, approved by the federal government in March. Under the terms of the March approval, the state would only receive its regular federal match rate—roughly 68 percent—for the partial expansion. In the current waiver request, Utah is seeking enhanced federal matching dollars—or a 90 percent federal match rate—for the partial coverage expansion. The request is inconsistent with current federal law that requires states to cover low-income people with income up to 133 percent of the poverty level (138 percent when income-counting rules are considered) as a condition of receiving the enhanced federal match.

Taken together, these waiver policies—per capita federal funding caps, work requirements, and, enrollment caps—would likely result in the loss of Medicaid coverage for significant numbers of low-income Utahans who rely on the program for much needed health care. We have already seen the impact of just one of these policies—a work requirement—on people in Arkansas who were subject to a similar requirement. In that case, more than 18,000 people in that state lost Medicaid coverage when the requirement was implemented. More losses were certain to follow had a court decision not stopped implementation. Given the risk of coverage losses, the same court also put a stop to a work requirement in Kentucky before it could get underway.

In both court cases mentioned above, the judge determined that the federal government cannot approve changes to state Medicaid programs that are not consistent with the central goal of the program—to provide medical assistance to low-income people. Time will tell if the court will find that adding more barriers to accessing and keeping Medicaid coverage accomplishes this goal.

Lynda Flowers is a senior strategic policy advisor at the AARP Public Policy Institute. Her areas of exertise include Medicaid, health disparities and prevention/public health.