Study: Medicaid expansion gives $2.3B boost to Michigan
Michigan’s expanded Medicaid program has boosted state tax revenues and personal income in the state, and can be expected to pay for itself for the next five years and beyond, according to University of Michigan study released late Wednesday.
The Healthy Michigan Plan, which provides Medicaid coverage to more than 600,000 Michiganians, added nearly $554 million to the state budget in 2016, due to increased tax revenues and decreased state health care spending, according to the analysis published late Wednesday in the New England Journal of Medicine.
The expansion increased personal income an estimated $2.3 billion in the state, due partly to health care-related job creation. The Healthy Michigan Plan results in about 30,000 new jobs every year – one-third of them in health care and 85 percent in the private sector, according to the report.
Federal funding for expanded Medicaid totalled roughly $3.5 billion in Michigan in 2016, money that rippled through the economy in the form of increased purchasing power for Michigan residents, the authors said. Researchers didn’t look at health impacts of the program, which would need to be examined over the long-term, Ayanian said.
The study comes as plans are underway in Washington to repeal the federal Affordable Care Act, which allowed states to expand Medicaid to low-income adults. The analysis will provide information needed for lawmakers as they decide on a repeal and replacement plan, said John Z. Ayanian, lead author of the study and director of the UM Institute for Healthcare Policy and Innovation.
“President Elect Trump and some leaders in Congress have said that their goal is to preserve coverage but do it in a more cost-effective way,” Ayanian said Wednesday. “I think we have to wait for the details of what those proposals will be.
“It’s certainly been a benefit to the state of Michigan from an economic standpoint to have about three and a half billion dollars of new funding coming in to support care for people in the Healthy Michigan Plan and to cover those costs for the doctors and the hospitals who are taking care of these persons.”
John R. Graham, a senior fellow at the free-market National Center for Policy Analysis, said the research “reveals the real purpose of Medicaid expansion — to increase profits and employment in hospitals and other sites of care.”
Graham disagreed that the expansion is a plus for Michigan or the nation. Thirty-one states signed on for the expansion, while 19 refused to adopt expanded Medicaid under the Affordable Care Act.
“Even if we accept Medicaid is socially necessary welfare, the federal government gets its money from all 50 states including Michigan,” Graham added.
“Workers and businesses outside the healthcare bureaucracy are paying the price of Obamacare’s Medicaid expansion, with sluggish job and wage growth.”