UTAH POLICY: Legislature’s Medicaid bill replacing Prop. 3 will cost $30-40 million extra to implement

Lawmakers are scrambling to find between $30 and $40 million extra to pay for the first year of the Medicaid expansion proposal that will supplant the voter-approved Prop. 3.

Multiple legislative sources tell UtahPolicy.com that SB96, which legislators are rushing to pass and get to Gov. Gary Herbert’s desk by the end of next week, will need the extra money to make sure they can cover everyone who would be eligible for the health care expansion. Those extra funds are in addition to the sales tax increase included in Prop. 3. Prop. 3, if implemented, would cost no extra money in the first year.

The bill has been held in the Senate for two days as lawmakers work to find the extra money. It’s expected to come up for a final vote next week.

“We’re working to make sure everyone in the gap is covered by April 1, which is when the initiative is scheduled to go into effect,” said a source with knowledge of the fiscal negotiations. “The will of the people is they want to expand Medicaid by April 1, and we’re going to do that.”

“It’s going to be a big chunk,” said another source involved in the funding negotiations on the bill.

Senate leadership acknowledged Friday that the alternative bill may carry a big price tag, but not reveal any specific numbers.

Senate Majority Whip Daniel Hemmert, R-Orem, said some of his colleagues were not thrilled with the current price tag on the bill.

“I know it came in at a number that people weren’t excited about,” said Hemmert. “We’re trying to draft the bill so we don’t have any cost overruns. Our goal is to expand Medicaid as the voters wanted.”

“We’re just trying to get it right,” said Senate President Stuart Adams, R-Layton.

SB96, sponsored by Sen. Allen Christensen, R-Ogden, expands Medicaid coverage to Utahns earning up to 100 percent of the federal poverty level while Prop. 3 fully expands Medicaid to Utahns earning up to 138 percent of the poverty level. The Senate plan gives Medicaid coverage to about 90,000 Utahns, with the federal government covering 70 percent of the cost. Prop. 3 enrolls approximately 150,000 Utahns on Medicaid with the government picking up 90 percent of the cost. The 50,000 Utahns who earn too much to receive Medicaid under the Senate plan would be put into the federal health care exchange where they can receive subsidies to pay for health insurance, but many will have to contend with out of pocket expenses.

The Senate plan hinges on winning a waiver from the Trump administration that would allow the 90/10 cost split from the feds for covering fewer Utahns.

Lawmakers are pushing their alternative because even with the sales tax increase to fund the state portion of full expansion, the initiative is projected to incur an $11 million shortfall in FY2021 and a $65 million budget gap in FY2024. Those projections come from the Governor’s Office of Management and Budget.

“We’re approaching this so we don’t have a $65 million shortfall in 5 years,” said Hemmert.

UtahPolicy.com reported Thursday that lawmakers planned to push their alternative plan through the legislature as quickly as possible in order to give themselves time to negotiate with the Trump administration to secure waivers prior to April 1.

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