Frank Pignanelli & LaVarr Webb: With government shutdown avoided, focus shifts to Medicaid expansion

The scary prospect of a federal government shutdown has been avoided, making Halloween less frightening in Washington, D.C. But in Utah, Medicaid expansion has risen from the dead, terrifying the Utah political world. We explore the huge (to use a Trumpism) political ramifications of these events.

Under the radar until recently, state leaders have been floating the idea of taxing medical providers to cover the state cost of adding up to 95,000 low-income people to Medicaid rolls, beginning in 2020. All legislators discussed the idea last week. Does the plan satisfy conservative lawmakers and will Medicaid expansion pass in a special session later this year?

Pignanelli: “However beautiful the strategy, you should occasionally look at the results." — Winston Churchill

Whether normal well-adjusted keen observers or demented political hacks (my species), politicos are in awe of this incredible development.

For several weeks Speaker Greg Hughes and House Republican leadership have repeatedly suggested the concept that medical providers who benefit from additional Medicaid funds should assume the state obligation. With just one statement, Hughes & co. have irrevocably changed this debate and ended the PR siege against them. Brilliant.

Yet, there is a political cost to this novel approach.

Federal law allows these tax architects to determine which medical classes and categories to be assessed and the rate. But here's the rub: discrimination inside a class/category is prohibited. For example, lawmakers cannot just target doctors receiving payments from the program but must tap all physicians, including those who do not see Medicaid patients. Almost 20 classes of identified health care providers — which contain hundreds of companies and thousands of individual practitioners — will pony up regardless of any benefits received. (“Unfair!” is the kindest response so far.)

Originally a contained skirmish, Medicaid expansion has escalated into a full-blown war with armies of lobbyists, trade associations, social media activists, grass-roots warriors, etc. (I represent several clients with dogs in this fight, part of the larger wolf pack growling at the Capitol.) The public hearing Tuesday will be historic, substantive and very entertaining.

The fight on Capitol Hill is no longer about widening Medicaid, but whether providers (regardless of receiving any Medicaid payments) must participate in funding this program. Each legislator now has thousands of constituents who will be impacted — few will be asking to have the fee imposed.

The dynamic has forever changed.

Webb: The new plan is a good-faith attempt to solve a problem and pay for the costs of expanding a government program. That’s a laudable objective. I wish the national Congress would pay for the programs it creates instead of borrowing.

But it’s extremely difficult for Utah’s Republican Legislature to raise taxes by $52 million, even though the tax is levied only on medical providers (some of whom will receive additional business), not on the public.

Given the state’s strong economy and revenue growth, Medicaid expansion could be financed through general tax revenue, which was Gov. Gary Herbert’s original proposal. The state’s economy will be bolstered by $450 million annually in new federal money, which will generate additional state tax revenue.

But in the short run, spending an additional $52 million for Medicaid expansion may mean less money for education, transportation and other state needs. It’s also difficult to predict how fast Medicaid costs will grow, increasing the state’s risk.

This is a tough issue with no easy answer. Utah policymakers essentially have three choices: Don’t expand Medicaid at all, forgoing $450 million in federal money and leaving some 100,000 Utahns uninsured; expand Medicaid using existing state money, or expand Medicaid and pay for it with a medical-provider tax.

The provider tax is the best solution among some very difficult choices. Federal regulators ought to approve it, and the Legislature ought to pass it.

Regardless of passage or failure, are there political ramifications to the Medicaid proposal?

Pignanelli: Legislators concerned with Medicaid expansion can claim — legitimately — they tried for something through a provider tax. But significant opposition and federal law prevented a possible solution. So any further attacks from advocates for "lack of compassion" are mooted.

However, anti-tax activists and other right-leaning organizations are displeased this is even under consideration. In response, Hughes and leadership could counter the exercise exposed the public to the financial issues surrounding this entitlement program.

Politicos are watching the public positioning of Herbert, his challenger Jonathan Johnson and future gubernatorial wannabes. Opportunities for advancement, and missteps, are in abundance.

Webb: No matter what the governor and legislators do, they are going to face angry advocates and political minefields. We hire them to make the tough decisions, so step up and decide.

A federal government shutdown was diverted (more like punted). What political storms does this cause for national politicians and the Utah delegation?

Pignanelli: John Boehner’s resignation satiated the blood lust … for now. The nation needs to be ready for an impasse in December.

Webb: Circular Republican firing squads are occurring more frequently. The party’s rigid right wing seems intent on losing the next presidential election and losing the Senate, setting back the cause of conservatism for years.