Herbert’s latest Medicaid expansion plan is as bad as the last

Herbert’s latest Medicaid expansion plan is as bad as the last

Utah’s “Gang of Six” (Gov. Gary Herbert, Lt. Gov. Spencer Cox, Senate President Wayne Niederhauser, House Speaker Greg Hughes, House Majority Leader Jim Dunnigan and Sen. Brian Shiozawa) has come up with a framework for a compromise on Medicaid expansion in Utah.

They haven’t released much information yet, but basically the idea is to have Utah’s hospitals, medical providers, and pharmaceutical companies foot the bill for Utah’s portion of Medicaid expansion, presumably in the form of a tax. There are plenty of concerns with this approach, and we discuss some of them in our podcast.

I want to address some of the statements Governor Herbert made about the new framework, as reported in the Salt Lake Tribune.

Because the health care providers stand to reap the benefits from the expanded coverage, Herbert said it makes sense to have them pay for more of the tab.

On its surface, this statement makes sense. These hospitals and healthcare providers are going to be the ones receiving all this Medicaid money, so they should pay Utah’s share, right?

For example, the governor said, University Hospital provides $125 million in care each year for which it never receives payment. Eighty percent of those costs would be covered under the expanded Medicaid, so it is fitting to ask the hospital to pay part of the state’s tab for the program.

University Hospital alone would receive at least $100 million a year in new money, according to Herbert. No wonder they’ve been so supportive of Healthy Utah. Come to think of it, they’re the only hospital I’ve seen out there lobbying for Medicaid expansion.

“The end result is they have a net gain,” Herbert said. “Everyone will have a net gain, as far as the practitioners who are providing the services and will pay for the costs [the state has] to come up with to provide the 10 percent match.”

All told, he said, the doctors, hospitals and pharmaceutical industry stand to gain between $150 million and $200 million. The 10 percent share the state would be expected to cover comes to about $78 million, meaning it would still come out ahead…

If you add up all the benefit Utah doctors, hospitals and pharmaceutical companies are going to enjoy from the Medicaid expansion, it adds up to between $150 and $200 million, according to Herbert. Which means half to two-thirds of the windfall will be going to University Hospital. Will other hospitals and clinics in Utah really benefit from this expansion?

Some have argued that [health care costs] will go up, said Herbert. “Mainly [those] people who don’t want to understand that this is not going to be passed on in higher health care costs.”

I’m pretty sure those economics textbooks I read in college told me that when demand increases for a good or service and supply stays the same, that price for that good or service goes up. This Medicaid expansion will provide zero deductible health coverage to 126,500 Utahns, a number that could be even higher as employers drop healthcare plans for employees making less than 138% of poverty level. I’m pretty sure that these folks will be visiting the doctor more often once they have the “best health insurance money can’t buy” but I could be wrong.

The reality is that if this government expansion happens healthcare costs will soar, heath outcomes will not improve, and Medicaid it will begin to eat away more and more of the state’s budget. Tell your legislators to vote no on the Gang of Six plan.

About author

Michael Jolley
Michael Jolley 29 posts

Michael has been active in Utah politics since 2009 and admits he still has a lot to learn. He lives in Provo with his wife Jessica and their two small children. Follow Michael on Twitter: @UTJolley

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