Utah’s financial model should not include Medicaid expansion

By Bob Williams

For the Deseret News

Published: Sunday, March 9 2014 12:00 a.m. MST

Utahns for the Medicaid Expansion hold a rally in the rotunda at the state Capitol on Wednesday, Nov. 20, 2013, in Salt Lake City.

Matt Gade, Deseret News

Enlarge photo»

After the problematic rollout of the Affordable Care Act, citizens are aware that the axiom “if something can go wrong, it will” often applies to government efforts. Citizens of Utah would be wise to be wary of Medicaid expansion at the state level, even the so-called “private option,” not because of website concerns but because it will be disastrous for the people who need care the most and fails to further federalism.

Roughly half of the states have accepted Medicaid expansion, in one form or another, despite mounting proof that expansion is a failure. Arizona’s expansion experiment from 2000 to 2008 resulted in costs that were 400 percent higher than anticipated.

Researchers from Harvard and Boston University have determined that Medicaid expansion will shift more individuals to become dependent on government insurance, rather than private policies, "without reducing the number of uninsured very much."

In Oregon, Medicaid expansion was done by lottery, allowing researchers to conduct randomized, controlled studies — and the results are not pretty. Compared to other equally eligible individuals, new Medicaid recipients showed no significant improvement in several physical health indicators, and did not even have higher diagnoses rates. A more recent study found that Medicaid recipients were more likely to go to emergency rooms, disproving the theory that expansion will cut down on those costly visits.

“Private option” Medicaid will be no better. The enrollees are still considered Medicaid recipients, and benefits remain completely unchanged — meaning that the predictions of cost savings and health benefits are flawed. It would give Medicaid expansion a free-market name without the free-market principles.

A real alternative is the Medicaid Cure program, piloted in Florida. The Medicaid Cure program allows enrolled patients to be involved in their health care choices, permitting them to pick from several plans. Medicaid Cure patients have shown improved health over those on traditional Medicaid.

The ACA promises full funding of expansion for three years, followed by a gradual reduction to 90 percent of funding over the long term. But can any state be confident that the federal government will not back out of the deal? Just ask Nebraska, which saw the federal government pull back some matching funds after the state’s economy improved.

The only thing as certain as death and taxes is the government’s inability to pay its bills.

There is no telling how the federal government may decide to settle the next fiscal crisis. Reducing the total funding for matching Medicaid funding to states has been suggested on both sides of the aisle. And Utah cannot afford to rely on more federal revenue. The nonprofit group State Budget Solutions found that Utah received 31.61 percent of its general revenue from the federal government in 2012.

The federal system encourages states to cooperate with the federal government, not rely on it for their existence. By taking on the burden of Medicaid expansion, Utah is ceding local control over such an important issue.

What makes the prospect of Medicaid expansion even more worrisome is that it flies in the face of responsible budgeting that truly respects federalism, some for which Utah has been nationally known.

Financial Ready Utah is a plan, developed by lawmakers and citizens, to ensure that Utah is ready for federal cuts, when they inevitably come. Accountants with an interest in their state's financial well-being spearheaded the plan to prepare for cuts so the state is not caught off-guard or unprepared. Their stake as taxpayers and concerned citizens is what motivated this movement to focus on establishing a healthier relationship with D.C., not one of mere dependence by Utah.

Those supporting Medicaid expansion should look to Financial Ready Utah for more guidance on how to reduce dependence on money controlled by bureaucrats thousands of miles away.

Medicaid expansion, no matter if it is called “private option” or something else, is the path to dependence, and a violation of the principles of federalism. Utah would be wise to continue down its path of responsible budgeting and focus on local solutions to help our neediest citizens.

Bob Williams is the president of State Budget Solutions, a nonpartisan organization dedicated to fiscal responsibility and pension reform. Williams is a former Washington state legislator and gubernatorial candidate.

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