Healthy Michigan saves General Fund dollars

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From Gongwer

Michigan’s Healthy Michigan Medicaid expansion plan has saved the state a “serious” amount of General Fund money, the state’s Medicaid director told the House Appropriations Community Health Subcommittee on Tuesday.

 Steve Fitton also told the panel that the state’s Medicaid system has succeeded in keeping total General Fund spending relatively flat over the past decade, something he called almost astounding given how much the state’s caseload has increased during that timeframe.

 And, while lawmakers were concerned about some proposed cuts in the 2015-16 budget from Governor Rick Snyder, Mr. Fitton said the Healthy Michigan plan has increased the number of patients going to hospitals, whose care will be paid for which will help offset some of the anticipated cuts proposed in the budget.

 Mr. Fitton spoke at one of several hearings scheduled by the subcommittee to review the proposed Department of Community Health budget, the largest in the state’s total budget (and one that will grow even larger when DCH is merged next month with the Department of Human Services).

 The state’s Medicaid budget is 90 percent (when items like community mental health are included) of the department’s budget, Mr. Fitton said. The total proposed in 2015-16 for DCH is nearly $18.8 billion, up by $926.9 million from the current year. Of that, slightly less than $3 billion is in General Funds, with about $13.5 billion in federal funds and the rest in restricted, local and private funds.

 The Medicaid total, including funding for the Healthy Michigan plan as well as basic Medicaid, totals more than $15.5 billion.

 The Legislature approved the Healthy Michigan proposal in 2013, in one of the more controversial actions in recent years. The federal Affordable Care Act called for all states to expand Medicaid eligibility to persons with incomes of up to 133 percent of the federal poverty level (on regular Medicaid adults in Michigan were limited to incomes of about 50 percent of the poverty level to be eligible for the program), but in 2012 the U.S. Supreme Court held that Congress could not require the states to expand Medicaid.

 The state’s action to expand Medicaid eligibility remains controversial, especially with Republicans. The move was blasted by a number of Republicans during the recent state convention.

 But the program has proven hugely popular. In less than one year since signups began on April 1, 2014, the state has seen nearly 580,000 individuals sign up for coverage. That is 100,000 more people than the total the state estimated would have signed up for coverage by the end of 2015.

 The program has created some “very serious General Fund savings” for the state, Mr. Fitton told subcommittee members.

 A spokesperson for the department later said those General Fund savings attributable to the Healthy Michigan plan total some $200 million.

 Under the ACA the federal government will pay the full cost of covering the increased population until 2017, when the state will have to begin contributing to the cost.

 Overall, Mr. Fitton said, Medicaid has done an outstanding job in terms of holding the line on General Fund expenditures. The budget total paid for out of the General Fund is relatively flat over the past 12 years compared to what might be expected.

 Overall, medical costs have increased by more than 80 percent and insurance premiums more than doubled in that time frame, pushing private health insurance costs to a rate far beyond what many corporations can handle. Health insurance premiums for single person coverage have increased by 127 percent.

 In 2000, 78 percent of the population had health insurance through their employers. That fell to 64 percent by 2012 (two years before the ACA took effect). Private companies “have been priced out of the market,” Mr. Fitton said.

 During the same time frame, the number of people covered by Medicaid has gone from 10 percent of the population to 19 percent.

 And of the Medicaid population, 55 percent are children while 22 percent are the elderly and disabled.

 But considering cost increases and caseload increases, Mr. Fitton said the state could have expected total General Fund spending on Medicaid to increase by more than 150 percent since 2002.

 Instead, the total increase has been about 20 percent, Mr. Fitton said, as the state has found ways to maximize federal funding along with state restricted funds.

 “That is an incredible record given the caseload,” he said.