Editor’s Note: In a new post for The Commonwealth Fund’s To the Point blog, summarized below, Manatt Health examines Utah’s efforts to pair Medicaid expansion in the state with enrollment caps that are set based on the state’s budget. The caps have received little attention, but capping enrollment would effectively convert Medicaid from an entitlement to a potential benefit available on a first-come, first-served basis. Caps not only affect enrollment, but have other implications for continuity of care and care coordination. Given the coverage and care impact of enrollment caps, the policy is likely to result in litigation. Click here to read the full post.
Last March, the Centers for Medicare & Medicaid Services (CMS) approved a Medicaid waiver allowing Utah to cover adults with incomes up to 100% of the federal poverty level (FPL)—far short of the full expansion up to 138% of FPL that Utah voters had approved. By adopting partial expansion, Utah accepted a lower federal matching rate, shouldering higher state costs. Utah planned to seek the higher matching rate through a second waiver request, but a few months after the March approval, the Trump administration announced it would not approve the higher matching rate for partial expansions. What has gone largely unnoticed through this process is the precedent-setting provision in the March waiver approval that allows Utah to impose an enrollment cap for the newly covered adult group at will, should projected costs exceed annual state appropriations.
An enrollment cap is a form of rationing that gives the state the authority to decide how much it will spend on Medicaid for poor adults and open or close the application process accordingly. Eligible people could be turned away, regardless of their healthcare needs, if the state reduces its appropriations, experiences higher-than-anticipated healthcare costs or enrolls a sicker group of enrollees.
People in Medicaid may lose coverage during a year for many reasons—from a rise in income to not completing paperwork. Often the situation can change again, which, under normal rules, would allow people to regain coverage. If the state closes enrollment, however, people cannot regain coverage. Even if they can re-enroll at a later point, there are gaps in coverage that disrupt care. Ironically, given the administration’s focus on work and community engagement requirements (also part of Utah’s waiver), an enrollment cap may discourage people from changing jobs or adding work hours, as they might not be able to regain coverage if the job ends or their hours are reduced.
The Utah waiver approval says little about CMS’s justification for the enrollment cap other than the state’s fiscal sustainability. CMS also claims that the policy promotes coverage, since the state indicated that it might drop coverage or curtail benefits if it did not receive the authority to close enrollment. CMS has used this explanation before to justify coverage losses from work requirements but has been rejected in litigation challenging those requirements.
In late September, Utah released another waiver proposal for public comment, which calls for full expansion at the enhanced matching rate. The waiver retains the enrollment cap, even though CMS has said that it would not approve a cap on populations receiving the higher federal match. If CMS approves the cap, litigation will likely follow. As the policy debate continues, the implications for coverage, care and costs should be carefully considered.