Should Michigan expand Medicaid coverage?

Medicaid provides health-care services for people who are disabled and/or below the poverty level and is paid for by a combination of state and federal tax dollars.

The original Affordable Care Act (i.e., Obamacare) included a provision to expand Medicaid eligibility for all individuals and families up to 133 percent of the Federal Poverty Level ($14,856 for individuals, $30,657 for a family of four in 2012).

Under the provision, the federal government will fund 100 percent of the expansion for the first three years, and federal funds will gradually decrease to 90 percent after 2020 – leaving states to pick up 10 percent of funding for the newly insured population. However, a recent U.S. Supreme Court decision allows states to opt out of the new Medicaid expansion.

If Michigan were to go along with the expansion about 450,000 more residents would be eligible for Medicaid. Included in this expansion would be a number of patients using mental health services already covered with state general funds. These existing patients would be covered by the expanded federal funding and, as a result, Michigan would actually save approximately $206 million annually.

Governor Snyder has proposed that a portion of these savings be set aside to cover the eventual 10 percent that Michigan would have to cover after federal funding is reduced. In theory, Michigan would still have funding for 100 percent of the expansion until the year 2035.

Opponents of expanding Medicaid coverage in Michigan fear that, after coverage is expanded, the federal government will renege on funding the 90 percent and stick the states with a greater portion of the cost. They point out that the budget assumptions of setting aside savings to cover the state’s share after 2020 depend on future state legislators and governors not raiding the funds for something else. Opponents claim that expanding entitlement programs like Medicaid create more dependency and discourage people from seeking better jobs and opportunities.

Supporters of expanding Medicaid coverage say that it will save the state money while providing better health care for its residents. They argue that if Michigan fails to do so, taxpayers will be subsidizing the citizens of every state that does. Supporters claim that small business will benefit because they would not have to worry about providing health insurance to many of the workers they hire. They also believe that expanding Medicaid will increase coverage for the uninsured, thus reducing uncompensated care costs that drive up health insurance for everyone.

Should Michigan expand Medicaid coverage as allowed under the federal Affordable Care Act?