For the most part, state officials have done everything possible to avoid taking part in the Patient Protection and Affordable Care Act, which goes into effect in earnest in 2014. They face another must-make decision this year regarding the act that will affect insurance coverage for many residents, mostly women and children.
First, Michigan Attorney General Bill Schuette joined the states’ lawsuit that challenged the law as being unconstitutional. Then, after the Supreme Court upheld the law’s constitutionality, Schuette advised state lawmakers not to create a health insurance exchange, which is an integral component of the law, until after the presidential election. The attorney general was counting on a Mitt Romney victory and having the Republican nominee keep his pledge to eliminate the PPACA.
After the election, and despite a victory by President Barack Obama that ensured the PPACA wasn’t going away, the state House Committee on Health Policy voted not to create the insurance exchange and instead leave the task up to the federal government — a move Gov. Rick Snyder didn’t want to happen. That action, however, drew praise from Schuette.
“I applaud and appreciate (House) Speaker (Jase) Bolger’s wise decision to halt the vote on implementation of a state-run health insurance exchange. I have always had grave concerns about establishing a health care exchange,” said Schuette in late November.
“In my discussions with other attorneys general and legal experts, we agree that many unanswered questions still remain, especially with regard to future costs to Michigan taxpayers, and the practical and legal impact of looming federal mandates,” he added.
Had Lansing authorized an exchange, it would have been run by a state-created nonprofit and paid for by the federal government through 2015. User fees were projected to pick up the operating costs in following years.
Faced without having a state-controlled insurance market, Snyder filed for a federal grant in hopes of collaborating with the U.S. Department of Health and Human Services on the insurance exchange.
“Ensuring that Michigan residents have the best available quality health care and customer service has been a priority from day one. I have felt strongly that a Michigan-run MI Health Marketplace could further accomplish this goal,” Snyder said.
“That said, we must be realistic about how feasible implementing this could be under the current federal timelines. At this point, we’re moving to a state partnership exchange,” added the governor.
States had to declare whether they would create their own exchanges by Dec. 14. These virtual markets must be up and running by Oct. 1.
Now state officials have another PPACA decision to make: whether to expand Medicaid coverage to residents hovering at the federal poverty level. Right now, 2 million in the state are currently covered by the public insurance program, and a recent analysis said the state could reduce its uninsured population by almost half, if elected officials agree to expand its Medicaid enrollment.
“If the state implements the expansion, the research indicates the number of uninsured would drop by 46 percent in Michigan,” said Rachel Garfield, a researcher for the Kaiser Family Foundation Commission on Medicaid and the Uninsured.
The American Medical Association cited a study conducted by the Center for Healthcare Research and Transformation, Blue Cross Blue Shield of Michigan and the University of Michigan. It reported even a moderate expansion would bring another 619,000 state residents into the Medicaid program by 2020. The study projected the state’s number of uninsured would drop from 1.1 million in 2010 to 290,000 in 2020 by extending Medicaid eligibility to 138 percent of the poverty level as the law allows.
The same study said extending Medicaid could save Michigan about $983 million over 10 years, as the federal government will fully pick up the state’s cost for the expanded coverage through 2016 and then pay 90 percent each year starting in 2017.
“Even after 2016, at least 90 percent of the costs of the expansion will continue to be covered by the federal government. This is a vast improvement of the 33 percent match the state currently has to kick in for Medicaid,” said Jack Billi, a physician, an associate vice president for medical affairs at the University of Michigan and chairman of the CHRT board.
Billi said the additional federal dollars would be spent in hospitals, doctors’ offices and pharmacies, meaning the money would be invested locally and would be turned over in the state’s economy several times. “This is before the fact that what we’re doing with this money is actually taking care of the health of underserved and often disenfranchised populations,” he said.
In its study, CHRT outlined where the state’s decade-long $983 million savings would come from by expanding Medicaid coverage. The report said the state would reduce its non-Medicaid mental health spending by $1.86 million, cut another $504 million from its inpatient medical spending on the incarcerated, save $395 million by eliminating the adult benefit waiver program, lower health spending on state employees by $23 million, and get a $44 million increase in tax revenues from health facilities and medical professionals.
According to the study, the state’s total budget savings would be nearly $3.22 billion after 10 years, while its cost for expanding the Medicaid coverage would be about $2.24 billion, resulting in a net savings of roughly $983 million.
However, a study from the Kaiser Family Foundation had different numbers. Kaiser reported the state would spend about $1.7 billion on the expansion over 10 years but would receive $16 billion in funding for the program over that period.
The expansion program begins next year, and Snyder hasn’t taken a position on whether the state should jump in or opt out. The governor admitted that expanding coverage could save the state money, but he said he needed to find out how much it would cost Michigan to operate the program when federal funding drops to 90 percent of the operating cost.