Utah Taxpayers Association
December 2010

State Senator Dan Liljenquist

State Senator Dan Liljenquist

During the 2010 session, Utah’s State Legislature cut spending and used portions of the rainy day fund to balance the budget. However, legislators had no choice, but to fund the state’s $540 million Medicaid contributions. Utah’s annual Medicaid spending consumes over 25 percent of General Funds and continues to grow at three times the rate of the state budget. Utah’s Medicaid expenses are on an unsustainable trajectory.

State Senator Dan Liljenquist, (R-Bountiful) explains, “The path we are on is unsustainable. Healthcare spending in general has all the characteristics of a classic bubble, and it is time to reform Medicaid.”
Medicaid is a federally and state funded program to provide healthcare for the needy, but expansions in services have increased enrollment and costs.  From FY 2009- FY 2011 increasing Medicaid costs were partially offset by match rates and direct federal funding provided in the American Recovery and Reinvestment Act, i.e. the federal stimulus bill.  However, starting in FY 2012, stimulus money will no longer be available and must be supplanted by state General Funds.

Senator Liljenquist explains that Medicaid is no longer a safety net; it’s a destination.  “We are doing more elective procedures, we are doing more prescriptions, which in Medicaid we don’t require co-pays, and its very inexpensive so the incentive is to sometimes over-utilize.”

In addition, federal health care reform will alter the Medicaid cost structure beginning in FY 2014.  Utah’s Legislative Fiscal Analyst estimates that by FY 2020, Medicaid – including the cost of federal health care reform – will make-up 42 percent of state General Fund spending.  If all those earning below 133 percent of the federal poverty level were to switch from private insurers to Medicaid, Medicaid’s proportion of total GF in FY 2020 would be 45 percent.
Your Taxpayers Association strongly supports Medicaid proposals to reform this broken, expanding system, including changes to how doctors are paid, how Medicaid doctors are chosen, and standards of care.

Medicaid reform will be critical to balancing future budgets since Medicaid and education spending are the two largest expenditures for Utah. Without reform, Medicaid’s ballooning costs will eventually be forced to draw money from education spending.