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Medicaid ‘doomsday’ bill threatens vital services for vulnerable Utahns, advocates say

HB463 would set a framework for a ‘waterfall’ of Medicaid cuts in case of financial shortfall. Despite outcry, it awaits a vote in the Utah House

By Katie McKellar - Utah News Dispatch | Feb 22, 2024

Spenser Heaps, Utah News Dispatch

Rep. Brady Brammer, R-Pleasant Grove, speaks in the House Chamber at the Capitol in Salt Lake City on Friday, Jan. 26, 2024.

With several concerned Medicaid advocates sitting behind him in the committee hearing’s audience, Rep. Brady Brammer, R-Pleasant Grove, acknowledged HB463 can be “a bit of a scary bill.”

“That’s because it’s meant to be a scary bill in the event of scary circumstances,” Brammer told the House Business and Labor Committee during the bill’s first legislative hearing last week.

“Meaning, this is a doomsday scenario bill,” he said, which would take effect in the event of a so-called Medicaid budget shortfall.

In a scenario outlined in the bill, HB463 would establish a cascading “waterfall” of one-at-a-time Medicaid budgetary actions until a financial shortfall is addressed. In order, that “waterfall” would:

  • Freeze hiring
  • Freeze wage increases
  • Freeze provider increases
  • Suspend benefits expansion
  • Discontinue “optional” services or populations
  • Roll back provider increases granted in the past year
  • Close enrollment

After years of debate — and a 2018 voter ballot initiative — the Republican-controlled Utah Legislature passed their own version of Medicaid expansion in 2019, which took effect in 2020.

Throughout the debate, GOP lawmakers have long worried about relying on the federal government’s match to fund a majority of Medicaid services. After Medicaid expansion, the federal government pays 90% of the cost, while Utah pays 10%.

The origins of Brammer’s bill hearken back to those concerns. He said worries persist that the Utah Legislature and the state’s budget could be “dragged into budgetary concerns.”

“There has always been some level of concern that the amount that the federal government …  pays for may change over time or may not always be as reliable as we hope,” Brammer said.

“That’s a sad thing to say that we may not be perfectly confident in our federal government to fund things, but I don’t think that’s unfounded particularly given our national credit rating was just downgraded,” Brammer said, pointing to Fitch Ratings lowering the country’s credit rating from AAA to AA+ last summer amid economic uncertainty and growing national debt.

In 2023, about $5 billion was funneled into Utah’s Medicaid programs, either through traditional Medicaid or Medicaid expansion, including about $3.6 billion in federal dollars, according to Brammer’s presentation on his bill.

Even though in the years since Utah expanded Medicaid no financial crisis has come to fruition regarding Medicaid, Brammer said he wants to give the state guidelines to follow if a crisis were to ever arise.

“Now, each of these are scary in their own right, and they’re blunt,” Brammer said of the cascading “waterfall” list of potential cuts in the case of a “shortfall.” But he said the bill would still allow the Legislature and the Executive Appropriations Committee — the powerful body that makes final budget decisions — to make exceptions to the automatic cuts and appropriate funds to redirect resources to Medicaid, perhaps from the Medicaid rainy day fund, to avoid the “waterfall.”

“What this allows us to do is instead of making decisions in the moment of crisis, this allows for some of the hard decisions to be made and undone in the moment of crisis,” Brammer said.

Brammer’s bill would define conditions that would constitute a “Medicaid shortfall” as any one of the following scenarios:

  • If there’s a drop of the state’s cumulative federal medical assistance percentage (also known as the FMAP) by more than two percentage points within a one-year period, or by four percentage points or more within a three-year period.
  • If the Executive Appropriations Committee finds that its most recently adopted revenue estimates are insufficient to pay the ongoing appropriations for the Medicaid program and Medicaid expansion.
  • If legislative fiscal analysts project that state expenditures for Medicaid services exceed funds that have been appropriated to fund those services.
  • If there’s an immediate state operating deficit.

“This is not meant to cut Medicaid when there are not problems. It does not do that,” Brammer said. Rather, it’s meant to set guidelines when there are “fairly catastrophic issues.”

Advocate, patient concerns

While Brammer said his bill only seeks to address a “doomsday scenario,” advocates for Utahns with disabilities and other vulnerable populations that rely on Medicaid services worry that it sets too low of a threshold that could trigger the “waterfall” of cuts.

For example, the federal government’s share of Medicaid dollars can fluctuate occasionally — it can even drop slightly during good economic times — so that doesn’t necessarily mean there’s a financial crisis looming.

Advocates say the conditions defined as a “Medicaid shortfall” and the resulting “waterfall” could too easily jeopardize crucial Medicaid services while also leaving those that it would impact with no recourse because it would establish a framework outside of the Legislature’s typical budget process.

Stephanie Burdick, a Salt Lake City resident who also sits on the state’s Medicaid Advisory Committee as a consumer representative, told Utah News Dispatch the bill could “manufacture a fiscal cliff to happen sooner.”

“If this bill was about planning for a budgetary crisis, that would be one thing,” she said. “But we’re talking about redefining a budgetary crisis to be much more than an actual fiscal cliff.”

The automatic “waterfall” of cuts outlined in Brammer’s bill should there be what he defined as a “Medicaid shortfall” include discontinuing “optional” Medicaid services, which could include prescriptions drugs, case management, physical therapy and occupational therapy.

“(Optional services) are not frivolous services,” said Lincoln Shurtz, a lobbyist representing Accountable Care Organizations and Molina Healthcare, which covers about 30% of Utah’s Medicaid population. He noted that pharmacy benefits, which are technically defined as “optional,” account for 40% of Medicaid spending in Utah.

Burdick said those cuts could impact children and adults with disabilities who rely on Medicaid to be able to go to work, school or simply live outside of medical settings.

“I just think (Utah) voters would oppose balancing the budget on the backs of children with disabilities and people with disabilities to be able to be free, in their homes and in communities and schools,” Burdick told the Dispatch.

Under the bill, lawmakers would not need to hold a hearing to decide which programs would get cut — that decision would be left up to state agency officials.

“Asking public servants who choose to serve within Medicaid, going into that work because they care about these people, and asking them to decide which cuts are going to recoup money back, is so demoralizing,” Burdick said.

Ciriac Alvarez Valle, senior policy analyst for the advocacy group Voices for Utah Children, spoke against the bill, saying it could have “serious implications for the lives of children, pregnant women, people with disabilities and rural communities.”

“It could mean potentially separating children and families from their loved ones. For example, rural kids would have to move from home- and community-based services that are classified as optional to institutional care in intermediate care facilities far from home,” Valle said.

She added that even if a “doomsday scenario” were to happen, “we worry about tying legislators’ hands to have a prescriptive list of cuts that were created with little feedback” from those who understand the importance of the services.

“We are heartbroken thinking about the potential impacts this policy could have on the lives of children all over our state — children and families who need the services to support their freedom of mobility, safety and opportunity to thrive,” she said.

Valle also argued Medicaid is “currently fiscally sound. We are not in crisis.”

“We have roughly $400 million sitting in a reserve account right now for this very scenario that I think Rep. Brammer is trying to address,” Shurtz said. “$400 million — two years — to address any significant shortfall in Medicaid funding due to federal action. That’s the safeguard that I believe we should have in place.”

Shurtz said the bill seems to try to “avoid what I would consider the food fight about what services should be cut and what services shouldn’t be cut.”

“You’re never going to avoid that fight,” he said. “If there is a reduction in funding, you’re going to have that fight. What you’ve done is just change the presumption and putting everyone on notice that they’re cut, versus having them come to you and essentially say, ‘Please don’t cut our program.'”

Shurtz said defining a Medicaid shortfall based on a fluctuation to the FMAP is what’s fundamentally wrong with the bill.

Paul Gibbs, a former Medicaid patient, urged lawmakers to remember “when we’re talking about Medicaid, it’s vitally important to always keep in mind that this is a program that deals with human beings.”

Jahn Curran, of Salt Lake City, said he’s currently on Medicaid expansion because he was diagnosed with cancer more than two years ago and didn’t have insurance at the time. After he contracted COVID-19, he said he spent over three weeks in the hospital, and for five months he was on supplemental oxygen. “Medicaid coverage saved my life,” he said.

“This bill makes no sense from a fiscal perspective,” Curran said, arguing Medicaid expansion should be seen as an “essential” expense rather than a luxury given it saves lives.

The state’s own Health and Human Services agency has even taken a rare position of opposition against the bill.

Nate Checketts, deputy director of the Utah Department of Health and Human Services, told the House Business and Labor Committee the bill was drafted without taking advantage of the “vast wealth of knowledge and information we have available and use regularly” to help make Medicaid decisions.

Checketts also noted there’s already a process in place under the Social Services Appropriations Subcommittee to work through budget issues, along with the Health and Human Services Interim committee to work through policy.

“All of those can provide good input on what the proper triggers of cures and resolutions should be,” Checketts said. “We appreciate the concept of having triggers, concepts and resolutions, but we think there needs to be more input on how those are created.”

Should Utah avoid ‘heat of the moment’ debate in a crisis?

Rusty Cannon, president of the Utah Taxpayers Association, supported the bill, thanking Brammer for “saying the quiet part out loud.”

“The biggest problem we foresee coming for the budget of Utah, which drives all of our taxation policies, is exactly what we’re talking about here today,” Cannon said. “As evidenced by the number of people here and the concerns, any debate in the heat of the moment in a disastrous area like this will be intense.”

Cannon argued it’s “perfectly proper” for Utah to have “a plan like this in place, to put some guardrails around and prepare for it instead of (in) the heat of the moment.”

Brammer said it’s “not lost” on him that he’s trying to make changes in a “difficult space.”

“This is really intended to protect one of our primary charges, is that we can’t have fiscal irresponsibility in the state,” Brammer said, adding that he hopes it’s never needed.

Despite objections, the House Business and Labor Committee voted 10-4 to give the bill a favorable recommendation. It’s now waiting to be considered on the House floor.

Utah News Dispatch is a nonprofit, nonpartisan news source covering government, policy and the issues most impacting the lives of Utahns.


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