Let health-care industry pay for Healthy Utah

Let health-care industry pay for Healthy Utah http://ift.tt/1w0Lfti
Let health-care industry pay for Healthy Utah

For the sake of argument, let us assume that Healthy Utah is good for Utah’s poor and good for Utah’s medical community. There is still an essential part of the discussion that is missing. Who should pay for Medicaid expansion? In good conscience, I can’t vote for Healthy Utah without answering that.

The existing Utah Medicaid program of around $2.2 billion per year is paid by federal tax dollars (about 70 percent) and state match (about 30 percent). Those state match dollars (roughly $698 million in 2013) come primarily from general fund (Medicaid takes about 24 percent of our general fund). Utah’s general fund is primarily from sales tax. In addition, some of the taxes come from the "Hospital Provider Assessment Act" which is set to expire in July 2016. This hospital assessment is interesting because the hospitals pay an additional tax in order to get higher Medicaid reimbursements. Essentially, by paying $1 the hospitals get back that $1 plus whatever the federal government match pays. In 2014, the hospital assessment brought a federal match of $114 million to Utah hospitals. Utah’s hospital assessment is currently around 1.1 percent of net operating revenues and is limited to a 5.5 percent maximum by federal law.

That is not the full story, though. Medicaid reimbursements are notoriously low, especially for physicians. A large part of the cost of Medicaid is paid in the form of cost-shifting. Those of us with usual insurance pay unreasonably high fees to compensate the medical community for the unreasonably low Medicaid fees. That cost shifting also supports much of the "charitable" medical work. That is worth remembering. We are already paying for Medicaid and charitable health care through our insurance premiums.

The next consideration surprised me. I thought the Healthy Utah money would go to buying new services for the poor. Those who should know in the Health Department tell me otherwise. Most of the new money will simply reduce cost shifting for existing Medicaid services. Due to cost shifting, we pay whether or not we adopt Healthy Utah. If we adopt it, the Feds help us pay.

The following government estimates are probably understated but they are still large enough to illustrate my point. Healthy Utah is full Medicaid expansion and covers those with earnings at 0-138 percent of the federal poverty level (about 146,000 people in 2021). Healthy Utah is expected to require $78 million per year in state dollars by fiscal year 2021. Healthy Utah pays the health care community about $520 million in fiscal year 2017 rising to about $725 million by fiscal year 2021. The health care community is already getting a fraction of that because those at 100-138 percent (about 53,000 people in 2021) are already receiving federal health insurance subsidies without Healthy Utah. If the state pays $78 million in 2021 for Healthy Utah, the Utah health care community gets $500 million more in 2021 than if there was no expansion. This works very much like the assessment.

So who should pay the taxes for Healthy Utah? I suggest that the beneficiaries of the program should pay the tax in the form of hospital assessments, pharmacy assessments and health insurance premium taxes. These taxpayers are going to pass the cost along, of course. As consumers, we would see it in our insurance premiums. But then, we already pay for much of Medicaid and charity care through our premiums because of cost shifting.

There are several benefits from having the health care community pay the Healthy Utah taxes:

1. We do not spend more sales tax dollars on this Medicaid expansion. This benefits practically all other state programs, including public education. If the cost of Healthy Utah grows, it will not be hurting these other programs.

2. Since the cost ultimately shows up in our insurance premiums, we get some benefit from federal premium subsidies.

3. It makes the health care community more accountable. Instead of burying the cost of Healthy Utah in sales tax, the net cost of expansion should show up in insurance premiums. Between regulation and price shopping, there should be a real incentive to be efficient in delivering health care.

Whether you agree or disagree, it is time to have this important conversation.

Rep. Earl Tanner is a West Jordan resident representing Utah House District 43. Source

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