Medicaid Expansion: A bum deal for Utah

By Jesse Harris

Utah has spent many years trying to find a middle road on Medicaid expansion. Most of the concerns have rightly been about trying to make sure that costs are contained before moving forward with any plan. Activists in Washington DC who wanted full as-is expansion cut a check for $342K (oh the irony of the group being named Utah Decides) to make sure the question would be on the ballot. Setting aside the obvious odiousness of a giant pile of DC money attempting to decide which way the state goes, the proposal itself has plenty of problems that warrant sending it packing.

To the authors’ credit, the “how do we pay for it” question is right there in the ballot proposal: an increase in the sales tax from 4.7% to 4.85% on non-food purchases. Based on the most recent data, this is projected to raise $85M in revenue. There are a few problems with this. First, it’s a regressive tax which will disproportionately affect those with lower incomes. That doesn’t make much sense to pay for a program to help those same people. Second, there’s no guarantee that sales tax receipts will cover the 10% contribution from the state as matching funds. If the rate increase falls short of that because of a dip in receipts, the money has to come from somewhere else.

But the biggest risk is that far more people than projected will sign up for Medicaid and the state is on the hook for way more money than originally projected. In fact, the history so far is that enrollment far exceeds projections. In some scenarios, a growing economy ends up offsetting it, but growth is not something you want to depend on to pay the bills. When (not if) an economic downturn arrives, you get hit with a double whammy of decreasing revenues and rising costs. Once you’ve started the program, you cannot end or curtail it leaving the only options to either raise taxes or cut spending on other services.

Proponents are very quick to point to potential offsets, but they are always based on “what if” scenarios. They predict more job growth, but Politifact found evidence to support that claim lacking at best. They predict better healthcare outcomes, but of those few studies that measure outcomes rather than use and access, the results were very modest gains.

This proposal is based on an ideological drive to push further expansions of government-subsidized healthcare while either ignoring or glossing over both the real costs of doing so and the limited positive outcomes that such moves provide. Given the high price tag for such uncertain benefits, it doesn’t make any sense for voters to support Proposition 3 in the election.

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