SUMMARY
On Friday, July 26, the Washington Post reported that the Trump administration is planning to reject Utah’s request to implement Phase 2 of the four-phase Medicaid expansion approved by the Legislature during the 2019 General Session. As a result, the state will now proceed with Phase 3. If Phase 3 is also rejected, the state will implement Phase 4.


REVIEW OF FOUR PHASES OF IMPLEMENTATION
Under Phase 1, the state expanded Medicaid eligibility April 1, 2019, to all individuals under the poverty level who were not previously eligible. This expansion was funded 70/30 (federal/state) and included authorization to cap state spending by limiting enrollment.

In July, the state requested authorization to implement Phase 2 of the Medicaid expansion, which would increase federal funding of the April 1 expansion to 90%. On July 26, the Washington Post reported that this request will be rejected.

With the rejection of Phase 2, the state will now prepare a request to implement Phase 3. As with each of the other phases, the details of Phase 3 are spelled out in S.B. 96. Phase 3, called the “fallback option,” increases eligibility to 138% FPL but preserves the state’s ability to limit state spending by capping enrollment.

If Phase 3 is rejected, the state will implement Phase 4, which expands Medicaid eligibility to 138% FPL with 90/10 (federal/state) funding but does not allow the state to limit state spending by capping enrollment.

While Phases 1 through 3 each require the U.S. Secretary of Health and Human Services to waive various Medicaid laws, Phase 4 can be implemented without federal waivers under the simpler state plan amendment process.


WHAT’S NEXT?
As described above, the possibility that Phase 2 could be rejected was envisioned by S.B. 96. The state will now prepare a request to implement Phase 3 and submit that request by March 15, 2020. Meanwhile, individuals below the federal poverty level will continue to be eligible for Medicaid and funded under the 70/30 (state/federal) arrangement. Unless the Legislature wishes to modify the four-phase strategy established by S.B. 96, no legislative action is required.


CONTEXT REFRESHER
S.B. 96 was enacted following passage of the November 2018 voter initiative that required the state to seek federal approval for full Medicaid expansion under the Affordable Care Act (expansion to 138% FPL with 90/10 federal/state funding).

Phases 1 and 2 of S.B. 96 seek to limit the expansion to individuals who are not already eligible for coverage heavily subsidized by the federal government in the health insurance marketplace. Phase 3 allows for coverage of those individuals but seeks to limit the state’s financial exposure. And Phase 4 allows for coverage of those individuals with no limit on the state’s financial exposure, but eliminates the initiative’s requirement to automatically increase healthcare provider payments in a way that would make it impossible to fund the expansion with only the sales tax increase approved by voters as part of the initiative.

Phases 1 through 3 include various combinations of provisions favorable to enrollees, the state, or the federal government (housing supports, self-sufficiency requirements, continuous eligibility, employer plan subsidies, per capita limit on federal funding, etc.)