In a devilish pandemic, Medicaid expansion is Utah's cave up in the hills

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In 2018, voters in Utah passed a referendum to enact the ACA Medicaid expansion, which would make Medicaid available to adults with incomes up to 138% of the Federal Poverty Level. Utah's Republican legislature and governor writhed, twisted, and enacted a partial expansion, to 100% FPL, effective in April 2019. When the federal government rejected a waiver to apply the ACA's 90% federal match rate to that limited expansion population, the state went to Plan B -- full expansion -- effective Jan 1, 2020. A work requirement was suspended in April 2020 in response to the pandemic.

Good timing. As the pandemic struck, jobless claims in Utah rose from 40,500 in February to 166,300 in April before falling back to 85,700 in June. The unemployment rate went from 2.5% to a peak of 10.4% in April to 5.1% in June. Medicaid enrollment responded:

Medicaid expansion to just 100% FPL: What's the effect on marketplace risk pool?

Utah legislators voted this week to contravene the will of Utah voters, expressed in a 2018 referendum, by limiting the ACA Medicaid expansion to adults with incomes up to 100% of the Federal Poverty Level, instead of the 138% FPL threshold stipulated by the ACA statute and the referendum.

The more limited expansion would be bad for Utahns in the 101-138% FPL range, as explained below, though it would save the state some outlays (if approved by CMS), since the federal government pays 100% of marketplace subsidies and "only" 90% of premiums for the Medicaid expansion population.

Leaving aside for a moment the effect on low income Utahns, and on state finances, I want to consider a tertiary question: How would expansion affect the risk pool in the state's ACA marketplace? (David Anderson has touched on this, at least on Twitter, and may be looking at it in more depth.)

In 2016 the answer would have been straightforward: the 101-138% FPL population is less healthy on average than higher income enrollees, and so raises costs and premiums. A 2016 CMS study estimated that premiums are about 7 percent lower in expansion states, controlling for a variety of other factors.

Does silver loading improve the risk pool?

The picture has been clouded, however, by "silver loading" -- state marketplaces' adaptation to Trump's cutoff of direct reimbursement of insurers for Cost Sharing Reduction subsidies that they are obligated to provide to low income enrollees who select silver plans. Those subsidies are highest in the 100-150% FPL range, where they raise the actuarial value of a silver plan from a baseline of 70% to 94%.

Utah and Alaska are on course to expand Medicaid. Are their eligibility estimates inflated? (Updated)

Both Alaska and Utah seem to be on course to implement the ACA Medicaid expansion. In Alaska, Governor Bill Walker is asserting his authority to do so without the approval of the legislature. In Utah, Governor Gary Herbert has struck a deal with legislative leaders -- still perhaps facing a rocky course toward legislative approval -- to seek a waiver for a "private option" form of the expansion.

In both states, as in any state, pro and con arguments over expansion are based on cost estimates which are in turn based on estimates of how many state residents will gain eligibility for Medicaid. It's noteworthy that in both states, in 2015, the Kaiser Family Foundation radically cut its 2014 estimate of those in the "coverage gap" -- that is, those whose incomes would have qualified them for Medicaid had their states accepted the expansion but are too low to qualify them for subsidized private plan coverage on ACA exchanges.*

In Alaska, Kaiser's estimate of the Medicaid gap population shrank from 17,290 as of March 31, 2014 to 10,500 as of  April 17 of this year. In Utah, the drop was from 57,850 in 2014 to 30,000 in 2015. These estimate cuts are mainly due to a redesign of insurance questions in the Census Bureau's Current Population Survey, intended to address previous under-reporting of respondents' insurance coverage.** While Kaiser cut its estimates for every state, the reductions in Utah and Alaska were far and away the largest. In both states, though, state officials' estimates of the "gap" population are closer to Kaiser's earlier estimates than to the newly reduced ones. In both states, in fact, working estimates are higher than Kaiser's 2014 figures.