A Governor’s Plea to President Obama on Utah’s Health Care Exchange

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The Honorable Barack H. Obama
President of the United States of America
1600 Pennsylvania Avenue NW
Washington, D.C. 20500

Dear Mr. President,

I want to personally thank you for meeting with members of the NGA Executive
Committee and me last week. I think all who participated believe it was a productive and helpful dialogue. I also believe this can be the beginning of a meaningful process of working with states and their governors to find solutions to the challenges we face in this country. We face a number of critical issues, but I would like to specifically address two: the “fiscal cliff” and health care reform.

All of us — federal and state officials alike — must find solutions that represent the best interests of America, and our ongoing efforts to restore our economy. Utah is one of the states in America experiencing great progress in our economic recovery. To suffer a substantial setback because federal officials cannot find a compromise economic solution would simply be an unwarranted tragedy.

Mr. President, now is the time for bold leadership to protect our economy, our nation, and our future. I recognize the need to reduce spending as part of the solution. These spending reductions should be accompanied by increased flexibility for states to implement programs.

States have demonstrated the ability to do more with less and still meet the goals and objectives set forth in federal programs.

I appreciate that you mentioned the Utah health exchange in our meeting last week, saying you want us to work with Secretary Kathleen Sebelius to make sure it is successful.

Before the ACA passed, Utah carefully and thoughtfully created a market-based, consumeroriented vision for health insurance market reforms, including exchanges. This was done consistent with Utah’s unique values, demographics, markets, and needs. The Utah model is innovative in its simplicity. Our goal is to give expanded access to information and choice of private healthcare plans to employers, employees, and consumers. Our exchange is now fully functional, offering a choice of 140 health insurance plans to 7,646 individuals in 318 small businesses throughout Utah. We are now embarking on a dramatic expansion of our exchange to more small businesses and we plan to include individuals and larger businesses in our exchange in the near future.

Of course, we are committed to helping those who need the support of the Medicaid and CHIP programs. However, we never intended for our exchange to administer Medicaid, enforce the individual mandate, or distribute federal tax credits.

I believe HHS officials’ current interpretation of the ACA is to require states to take a more government-centric, standardized approach to exchanges. This results in less choice and more reliance on public programs.

Mr. President, I want the Utah exchange to survive and thrive as we originally envisioned it. In fact, I hope it becomes a model for other states to use as a platform for their own versions regarding healthcare reform. Therefore, I have a simple request for you: Please instruct the Department of Health and Human Services to certify the current Utah version of an exchange as compliant with the Affordable Care Act. You have supported giving flexibility for states. Certifying our current exchange will give us that flexibility.

Furthermore, I respectfully request that you instruct HHS to declare the Utah exchange model as the minimum federal standard for ACA compliant exchanges. I am confident that if you make this change, several other states will join Utah and request certification for “state based exchanges” based on our model, thus spreading a proven approach that lowers costs and increases access. I am committed to our model, and I will continue to pursue a Utah solution to Utah challenges.

Mr. President, I am required to notify HHS of Utah’s plan regarding a federal exchange option by December 14. Time is short. In order for Utah to move forward, I need help from you regarding these requests before that deadline.

Utah has also been at the forefront of innovation and cost-cutting in our state Medicaid program. Medicaid was originally designed as a partnership between the states and the federal government. Unfortunately, the federal government has created too many restrictive rules, which make it difficult for states to meet local needs. Under the current system, states must seek permission from HHS before implementing changes or making improvements. This results in the federal government holding all the bargaining chips and threatens a complete loss of federal funding if states don’t adhere to strict federal control. This is not the “give and take” of a true partnership.

Over the past several years Utah has developed several innovative proposals to reduce costs, increase quality, and ensure maximum access to healthcare services for Medicaid recipients. Unfortunately, when we submitted these waiver requests, HHS officials met them with either reluctance or rejection.

Attached to this letter is a list of all Medicaid waiver requests the State of Utah has submitted to HHS since 2007. Of the nine requests submitted, initially only two were granted.

Thanks to your personal involvement, we were able to get two of these denials reversed – one allowing paperless Medicaid applications and one providing incentives for healthy behaviors.

When HHS cherry-picks parts they favor and rejects other vital plan components, it becomes impossible to accomplish our overall objectives. Mr. President, we need you to instruct HHS to accept the waiver requests submitted by Utah because they meet the overall objectives of the program and we are in the best position to run our state program. With that flexibility we will be free to do what we do best – innovate solutions that reduce costs, increase efficiency, and improve quality.

Thank you, again, for working with the State of Utah, and for taking the time to include states in the discussions to fortify our nation’s fiscal health. I am optimistic that this constructive dialogue can continue, and I look forward to meeting and discussing these issues with you as we work together on behalf of the people of Utah and the nation.


Gary R. Herbert
State of Utah

Medicaid Flexibility

Federal Government has Denied Several Requests to Improve Utah Medicaid

When states elect to offer Medicaid, the program comes with a long list of federal rules, regulations, and restrictions. In an attempt to bring some innovation to the program, states can request demonstration waivers to pursue alternative ways to provide this coverage.

In recent years, Utah has applied for several different demonstration waivers or amendments. The majority of these requests have been denied by the federal government.

1. Accountable’Care’Organizations – The State wanted to change managed care in a way that brought more accountability to health plans, medical providers, and clients. The federal government denied three of the five changes requested by the State:

a. Allow the State to charge slightly higher co-pays for some services (e.g., charging $5 for a preferred generic drug). [DENIED’–’Requires’a’change’in’federal’law]

b. Allow the State to use a prioritized list of services when implementing cuts during budget shortfalls (i.e., the lowest priority services would be cut first). This request was modeled after the approved practice in Oregon’s Medicaid. [DENIED]

c. Allow clients to have the option to receive premium assistance for enrolling in their employer’s health plan (or COBRA plan) rather than receiving direct coverage through Medicaid. [DENIED]

d. Allow the State to encourage plans to change their reimbursement to providers away from the traditional fee for service arrangement. [APPROVED]

e. Allow the State to contract with plans to offer incentives to clients when they complete certain healthy behavior activities. [Originally DENIED then!APPROVED]

2. Community’Service – The State wanted to permit some applicants early admission to the Primary Care Network (PCN) program if they completed a certain number of community service hours each month. [DENIED]

3. Premium’Assistance – The State wanted to expand the use of its premium assistance program (Utah’s Premium Partnership for Health Insurance), which would allow more clients the option to move from traditional state health insurance programs to the private health insurance market.

The State sought two changes in this area:

a. Allow the State to increase coverage to 200 percent of the federal poverty level for parents of CHIP children and other adults. [APPROVED]

b. Allow the State to offer premium assistance to families if they opted to purchase coverage in the individual, non-group insurance market. [DENIED]

4. Paperless Application – The State wanted to allow individuals to elect to apply for Medicaid coverage via an electronic application process, rather than by using paper applications.

[Originally DENIED then APPROVED]

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