An Analysis of Wyoming Senate File 118

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SUMMARY

Senate File 118 expands Medicaid eligibility to the ObamaCare Medicaid expansion population— roughly 24,000 working-age, able-bodied adults—for at least three years. This bill would enroll some of the Medicaid expansion population in qualified health plans on the ObamaCare health insurance exchange and would enroll some individuals in Old Medicaid. Enrollees earning less than the federal poverty level would be charged premiums totaling no more than 2 percent of their income (no more than $19/month). The bill does not specify how much enrollees earning between 100 and 138 percent of the federal poverty level would pay for their health care. The bill seeks to “avoid creating a disincentive for a beneficiary to increase that beneficiary’s household income” and allows the governor to consider Health Savings Accounts.

SENATE FILE 118 CREATES A TWO-TIERED SYSTEM OF CARE

Under this expansion, able-bodied, working-age adults will receive private health insurance on the ObamaCare health insurance exchange. But the existing Medicaid population—children, seniors and individuals with disabilities—are stuck in the broken Old Medicaid system.

SENATE FILE 118 DOES NOT PROMOTE PERSONAL RESPONSIBILITY OR “SKIN IN THE GAME.”

Entering into ObamaCare’s Medicaid expansion means that Wyoming is prohibited from charging more than 5 percent of a Medicaid enrollee’s monthly income in premiums, copayments or other cost-sharing. But Senate File 118 provides even less “skin in the game” than traditional Medicaid allows, because Medicaid expansion enrollees below the poverty line would pay 2 percent or less of their income in cost-sharing premiums. Senate File 118 does not list any minimum cost-sharing requirements for enrollees over the poverty line.

SENATE FILE 118 MAY CREATE A POWERFUL DISINCENTIVE TO WORK.

Medicaid expansion creates a massive new “tax cliff” for earning additional income, where earning an extra dollar makes them ineligible for the program, costing them hundreds to thousands of dollars in benefits. The Congressional Budget Office recently highlighted this fact, noting that ObamaCare’s Medicaid expansion discourages work among this population. Researchers at Emory University and the University of Colorado have also found that in other states that expanded Medicaid to able-bodied, childless adults, full-time employment among this group decreased by eight percent and the share who didn’t work at all grew by 11 percent.

SENATE FILE 118 TAKES FEDERAL FUNDS THAT DRIVE OUR NATION’S DEBT.

If the goal of Medicaid expansion is to recapture state tax dollars, then it will be impossible to do that without also triggering federal deficit spending. According to the Congressional Budget Office, only 64 percent of the federal health law’s funding comes from new taxes and fees. The rest comes from future cuts to Medicare and borrowed debt.

SENATE FILE 118 COULD COST TAXPAYERS BIG.

The legislation calls for “state general fund neutrality”—meaning that the cost of Medicaid expansion under Senate File 118 can’t be more than traditional Medicaid expansion. But this may not be possible, because Senate File 118 is based on the Arkansas and Iowa models of “Private Option” Medicaid expansion, where enrollees also get private health insurance on the ObamaCare exchange. The Congressional Budget Office estimates that ObamaCare exchange plans could cost 50 percent more than traditional Medicaid. The federal government also requires budget neutrality for Medicaid waivers, where states are at risk for any costs that are higher than traditional Medicaid and cannot receive federal matching funds for cost overruns.

SENATE FILE 118 MAY BE A ONE-WAY TICKET TO OBAMACARE—WITH NO WAY OUT.

This bill contains a “trigger” that attempts to end the Medicaid expansion program if federal matching funds fall below 90 percent. But this “trigger” may be ineffective. Federal law classifies the Medicaid expansion group as “mandatory” once a state enters into ObamaCare’s Medicaid expansion. While the Supreme Court held states could forego Medicaid expansion altogether without placing their existing funding at risk, it did not hold that separate federal requirements on maintaining eligibility for mandatory populations would not apply after a state agrees to expand Medicaid. Although the federal government has said in non-binding letters that states may enter or exit Medicaid expansion as they please, this non-binding promise has never been codified into law or regulation and Medicaid beneficiaries could have standing to litigate the matter in federal court.