Lyon: House health bill threatens Medicaid expansion

Jonathan Oosting

Lansing — The U.S. House health care overhaul legislation approved last week could trigger the end of the state’s Healthy Michigan Medicaid expansion program or require legislators to make major changes, the state’s health director said Tuesday.

It would cost the state roughly $800 million a year to continue the low-income insurance plan on its own if federal funding is reduced to the standard matching rate for other Medicaid enrollees, said Michigan Health and Human Services Director Nick Lyon.

“If it becomes more costly for the state, then Healthy Michigan could be terminated,” Lyon said, noting the 2015 Michigan law includes a provision to end the Medicaid expansion if state costs exceed savings. “If you see decreased federal resources in play, then could that trigger actually occur? That’s concerning.”

The Senate Fiscal Agency concluded in mid-March that proposed cuts to federal Medicaid spending included in the initial U.S. House GOP plan would trigger the end of Michigan’s expansion program at the latest by fiscal year 2020, which begins Oct. 1, 2019.

Lyon discussed the federal health care legislation after U.S. Health and Human Services Secretary Tom Price and Kellyanne Conway, counselor to President Donald Trump, met with Michigan officials to discuss efforts to combat the national opioid prescription drug abuse epidemic.

The health and human services director said he did not have the opportunity to discuss Healthy Michigan with the Trump officials. A spokeswoman for Michigan Gov. Rick Snyder did not indicate whether he had a chance to talk about Medicaid with Price or Conway, saying only that they discussed opioids.

Lyon told reporters the Healthy Michigan plan initially allowed the state to pull state general fund dollars out of community mental health services because Medicaid coverage “helped us provide a better benefit around substance abuse and behavioral health.”

“So that’s something that concerns me,” he said.

Under the Affordable Care Act, the federal government for the first three years paid for the full cost of Michigan’s Medicaid expansion for low-income residents whose income is between 100 percent to 133 percent of the poverty level. Starting this year, states are required to contribute payments that will be ratcheted up through 2020 when states’ contributions will be capped at 10 percent.

Continuing Healthy Michigan would likely require a state appropriation and legislative changes, Lyons said.

As of Monday, 662,451 residents had signed up for the government-funded health coverage. Michigan’s unique form of Medicaid expansion, which required two federal waivers, requires contributions to a Health Savings Account and co-pays that can be reduced through healthy behaviors.

Healthy Michigan has been “hugely successful,” Lyon said. “I feel it’s really helped us address health at an individual level better than traditional government programming has done.”

This is the first time since the House narrowly passed the American Health Care Act last Thursday that the administration of Snyder has publicly expressed its reservations about the legislation backed by Trump.

Lyon noted the legislation must still go through the Senate, where it could undergo significant revisions.

When the legislation passed in a 217-213 vote with the support of all nine Michigan House Republicans, a Snyder spokeswoman would only say the governor was monitoring the bill and would work on it with senators. Snyder, who also met Tuesday with Price, had earlier expressed concern about the bill’s funding adjustments and freeze on the Medicaid expansion.

Republicans have argued that the Affordable Care Act is collapsing from its own failures. Insurers have pulled out of several states, and a third of the nation’s counties only have one insurer that consumers can select from the health insurance exchanges.

A few insurers have left Michigan, where premiums this year rose an average of 16.7 percent for individual insurance plans in the Obamacare exchanges.