Chamber: Michigan Medicaid expansion ‘out of control’

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan’s popular Medicaid expansion program is “out of control,” state Chamber of Commerce CEO Rich Studley said Wednesday as he backed Republican legislation to require able-bodied adults to work, enroll in job training or pursue additional education to maintain government health care coverage.

Studley said the chamber was “persuaded” to endorse the 2013 law that created Healthy Michigan and expanded Medicaid eligibility to more low-income residents, but employer support “will collapse” without changes, he warned lawmakers in testimony before the Senate Competitiveness Committee.

“We’re increasingly concerned that the program that was implemented is out of control,” he said. “It is over-enrolled. It is under-funded. It does not contain many of the common-sense reforms to encourage and support individuals as they work.”

Legislation proposed by Sen. Mike Shirkey, R-Clarklake, would require the Michigan Department of Health and Human Services to seek a federal waiver to implement a 30-hours-per-week work, training or education requirement for able-bodied Medicaid recipients in Michigan.

Critics argue the change would force vulnerable residents to lose critical health care, create new administrative costs that may outweigh savings and lead to expensive litigation over the waiver, which President Donald Trump’s administration invited for the first time this year.

But Shirkey contends that five years after he and other legislators approved the Healthy Michigan program, it is due for re-evaluation. In addition to the work requirements bill, he is developing legislation that would strengthen original calls to cut off access after 48 months and is exploring ways to allow a few months of coverage for new hires to reduce risk for employers.

“This was not intended to be an indictment of Healthy Michigan, but it is a challenge to the way we rolled it out and an opportunity for us to recalibrate,” Shirkey said.

He argued that adding work, training or education requirements for able-bodied adults on Medicaid would encourage more residents to enter the labor market and benefit employers struggling to find qualified workers.

Republican Gov. Rick Snyder pushed Michigan legislators to accept federal funding to expand Medicaid eligibility under the Affordable Care Act in 2013. The resulting Healthy Michigan program is one of his flagship accomplishments.

More than 680,000 lower-income residents have enrolled in the government health insurance program since its launch in 2014, far surpassing the original projection of 470,000. Total Michigan enrollment in Medicaid tops 2 million.

Snyder has not taken a public position on Shirkey’s work requirement bill, but his office has been working closely with the state health department to review the proposal and how it would affect current Medicaid and Healthy Michigan programs, spokeswoman Anna Heaton said.

The governor and Shirkey “have an open dialogue on this topic,” Heaton said. “I would not categorize Healthy Michigan as ‘out of control.’ In fact, it has helped reduce uncompensated medical care in the state by 50 percent.”

Healthy Michigan has “been a blessing for all of our people in this state (who now) have health care – it’s how you get to see a doctor,” said Krista Nordberg of the Wasthenaw Health Plan, who opposed Shirkey’s proposal in committee and said administrative errors could cause qualified people to lose coverage. “You’re talking about huge costs and a lot of red tape.”

The federal government initially funded full costs of Medicaid expansion for residents who earn up to 133 percent of the federal poverty level, which is roughly $16,000 for an individual or $33,000 for a family of four.

But federal funding dropped to 94 percent this calendar year and will fall to 90 percent by 2020. Snyder’s proposed budget for next year includes $200.4 million in general fund spending for the program, which he has said is “more than offset” by other state savings, including resulting Medicaid dollars for mental health services and corrections health care the state had previously paid for.

“This is not about money, other than ensuring that we have the resources necessary that can be directed to those that most need it,” Shirkey said.

The proposal is “not cruel and unusual punishment,” said Studley, comparing it to the unemployment insurance system that requires out-of-work residents to look for a job to qualify for benefits.

Policy analysts writing for groups such as the non-partisan Citizens Research Council of Michigan and the conservative Heritage Foundation have warned that Medicaid work requirements “won’t work” because of likely difficulties enforcing and administering the program. Most able-bodied Medicaid beneficiaries already work, according to the national Kaiser Family Foundation.

The state Senate proposal would “result in the loss of coverage for individuals, create an increased and undue burden on physicians and employers unable to complete cumbersome paperwork, come at a significant financial cost to both state and federal government,” said Gilda Jacobs of the Michigan League for Public Policy.

“Medicaid is a health insurance program, not a jobs program,” she added.

The Trump administration this month approved Arkansas’ plan to require thousands of people on Medicaid to work or volunteer. It previously approved plans by Kentucky and Indiana and is considering proposals from other states.

The Michigan Senate Fiscal Agency estimates that administering the new work requirement program for Medicaid recipients would cost the state between $20 million and $30 million a year. Potential savings would depend on how many residents left Medicaid, either because of increased income or failure to meet the work requirement.

The proposal would require able-bodied Medicaid recipients to self-report their income through an existing online portal called MiBridges. The state would conduct human and computer audits to gauge accurate reporting, said Shirkey, who suggested Michigan could take a more efficient approach than other states.

The full Michigan Senate was expected to vote on the Medicaid work requirement legislation as soon as this week, but Shirkey said he decided to delay the committee vote so he can tighten language during an upcoming two-week legislative break that ends April 10.

“We will get this through committee soon after break, and it will get through the Senate soon after break,” he said. “And it will be a thoughtful, comprehensive package.”

Democrats are likely to oppose the legislation but will be powerless to stop it as a minority in the upper chamber. Sen. Rebekah Warren, D-Ann Arbor, told Shirkey the proposal seems like “a solution in search of a problem” and asked him for more data on residents who would be affected.

“As we go forward making life-changing policies for people, shouldn’t we know about what barriers actually stand in the way for them to be able to get and hold a position?” Warren said.