Stateline Story

Utah to Use Gifts to Pay for Medicaid

  • July 13, 2006
  • By Daniel C. Vock

If Gov. John Huntsman's plan works, Utah will use $2 million in private donations - instead of state tax dollars - to cover the dental bills of 40,000 poor residents on Medicaid next year. 

The unusual arrangement — and the political drama that led up to it — stirred up a hornet's nest over how Medicaid is funded and how state officials choose what services to pay for. 

Huntsman, a Republican, turned to private citizens to cover the state's share of dental bills for the elderly, blind and disabled on Medicaid after a stand-off with his GOP-led Legislature. During a special session in May, the governor asked lawmakers to let him use leftover money from last fiscal year, which ended June 30, to continue paying for the dental benefits this year. But the lawmakers, who already had finished working on this year's budget, refused. 

So the governor talked privately to deep-pocketed potential contributors and publicly invited all Utahns to pitch in. Billionaire James Sorenson promised $1 million, as long as the state found another $1 million in donations. Then Intermountain Healthcare, the state's largest operator of hospitals, said it also would give $1 million. 

The donations staved off this year's political crisis, but the fallout is far from over. One of the biggest questions is whether it's appropriate to rely on private donations to pay for what always has been a government service. 

"This is not a good precedent. Nobody should think this is appropriate for funding any medically necessary care," said Judi Hilman, the leader of the Utah Health Policy Project, which advocates for sustainable universal health coverage. 

While private donations have been used elsewhere to cover copayments for Medicaid patients, there is little or no precedent for using charity dollars to pay the state's share of Medicaid expenses. 

Hilman said some Utah lawmakers she's talked to were initially excited about the idea of using more charitable contributions to pay for Medicaid. She said it's a bad idea, because donations are unreliable and because it would require a constant effort by state officials to solicit funds. 

Utah officials still don't have the final go-ahead to use charity dollars to pay for Medicaid patients' dental work. They need approval from the federal government, because the state is trying to use the $2 million to capture another $4.7 million in federal matching grants. 

Utah Medicaid Director Michael Hales said his office is working with the Centers for Medicare and Medicaid Services to make sure the arrangement meets the agency's rules. 

CMS officials are taking a close look at Intermountain's share because it is a health care provider. Even though the hospital group doesn't provide dental services, the federal government wants to make sure it won't receive a windfall of Medicaid payments as a result of the contributions, Hales explained. 

An Intermountain spokesman said the nonprofit group planned to give money to support the Medicaid program only for one year. 

Spokesman Jason Mathis said Intermountain expects the dental services to be fully funded in the future, especially because of the publicity that this year's controversy generated. 

Senate Majority Leader Peter Knudson (R), an orthodontist, also said the state isn't likely to keep asking for private money. "That's too iffy. You can't predict what donations would be. And the state is not soliciting that," he said. 

Several events combined to make the small appropriation a big political deal. 

First, lawmakers were chafing over continued federal reductions in Medicaid, which the states administer but both the states and federal government pay for. Legislators said they had to find $19 million this year alone to cover services for which the federal government would no longer pay. 

Second, only half of the pool of taxpayer money dedicated to providing dental services last year was spent because many dentists refused to take Medicaid patients. They complained that Medicaid reimbursement rates were far too low. 

Knudson said the governor pushed the dental services only after the Legislature wrapped up its budget negotiations, a point that Hilman of the Utah Health Policy Project disputes. In any event, legislators were reluctant to amend the budget for one item for fear that other people would make more demands, too. 

But public outcry was swift and loud. Activists and editorialists began asking why legislators could find $15 million for a parking garage at the Capitol complex but not $2 million to treat poor people's dental problems. 

The issue likely will resurface next year. A panel of lawmakers will scrutinize Medicaid spending in the months before next spring's legislative session in an effort to hold down costs and reexamine the program's priorities. 

Because the donations cover only one year of expenses, legislators will have to decide what to do for next year when they write next year's budget. 

And even with the donations, some 18,000 adults on Medicaid in Utah lost their dental care this month. Until June 30, Utah covered all adults on Medicaid. Now only seniors, the blind and disabled will be insured for dental benefits. Children will continue to receive benefits.