StateBudgetSolutions - Michigan: Don’t rush into Medicaid expansion

By Bob Williams, State Budget Solutions

There are few sure things in life. If Medicaid expansion comes to Michigan, however, you can be sure that the health of new recipients will not improve and costs for the failing program will continue to rise.

Improving Michiganders health, while keeping costs from skyrocketing has to mean something to Governor Snyder and the state legislature. A targeted vote on Medicaid expansion is looming in late August. There’s nothing wrong with discussing the proposal because something needs to be done to improve care and lower costs, but Medicaid expansion is the worst option on the table.

Michigan can look to other states in the country to find reasons why expansion should be avoided. Take Oregon, which expanded its Medicaid program in 2008 by a lottery. This allowed researchers writing in the New England Journal of Medicine to conduct a double-blind study on the health effects of Medicaid on new recipients. The researchers found that in key measurable health outcomes--blood pressure, cholesterol, and glycated hemoglobin levels--new Medicaid recipients had no significant gains over their counterparts who “lost” the lottery. New recipients did not even have significant improvement in the diagnosis of these critical health problems. The study showed that there were improvements only in mental health and the recipients’ feeling of financial security. 

In other words, Medicaid expansion made some people “feel” better even if they weren’t actually healthier.

A University of Virginia study showed that surgical patients with Medicaid coverage were 13 percent more likely to die before leaving the hospital than those who had no insurance at all. 

Medicaid is also costing more to do far less in improving the health and lives of low-income individuals. Arizona used a waiver in 2000 to save taxpayer money and expand coverage, only to find that enrollment was far greater than expected and spending her recipient was much higher than predicted. This was particularly true among childless adults, one of the primary demographics in the currently proposed Medicaid expansion. 

Lawmakers should note that the federal government has already frustrated some states that have already decided to move forward with Medicaid expansion with a lack of response and info. West Virginia’s governor recently wrote to the Department of Health and Human Services (HHS) to demand answers to several questions about implementing the program. State officials say that the federal government continues to delay expansion in West Virginia due to HHS’s failure to respond. 

Even if federal officials respond in time for the state to submit its plans in October, other questions will remain. For example, the West Virginia State Medical Association has expressed fears that the state does not have enough doctors to handle the influx of new Medicaid recipients. Thousands of people will have an insurance card but what good does it do them if they have nowhere to get health care?.

On the other side of the coin, consider the successes of those states that rejected traditional Medicaid in favor of better alternatives.

Medicaid Cure is a successful pilot program that has been working in Florida, Louisiana and Kansas. The Cure program gives patients a choice of which of the numerous private plans they will enroll. It gives low-income residents the flexibility to change their plan for any reason. In Florida, health measures for low-income residents on the program have improved over traditional Medicaid. Florida has saved roughly $118 million in the five counties where Medicaid Cure has been implemented. Estimates show that when the program goes statewide, Florida will save $1 billion while still providing better health care.

Rhode Island also found that tossing the old Medicaid model led to better results. The Ocean State used a block grant from the federal government to innovate their system and saved $100 million and slowed the growth of Medicaid spending to three percent per year.

Rather than make a mad dash to the Medicaid expansion finish line, before the October deadline, Michigan’s leaders should step back and consider alternatives to what we know to be a failed, expensive program. If the Governor and the legislature are serious about improving the health of low-income Michiganders without breaking the bank, they can be sure that Medicaid expansion is not the answer.

Bob Williams is the President of State Budget Solutions and a former Washington state legislator, gubernatorial candidate and auditor with the Government Accountability Office.