Editorial: Obamacare keeps costing Michigan
Michigan adopted Medicaid expansion with a certain understanding of its projected costs, and the promise of “free” federal funds. Now those costs for the state will be substantially higher over the next five years than taxpayers were led to believe when the legislation was adopted.
It’s not particularly surprising that, given the option to receive heavily subsidized health care, more Michigan adults have jumped at the chance than Gov. Rick Snyder and the Legislature originally assumed would.
But the increased number of participants will nonetheless create instability in the state’s budget by 2020, and money will likely have to be shifted from other areas to help cover the costs of Medicaid expansion.
The language of the law requires that savings outweigh the state’s share of costs for the program — or no one is eligible. But the law also gives the Department of Community Health discretion on this issue.
The House Fiscal Agency projects the state’s adoption of the expansion — the Healthy Michigan Plan — that was part of Obamacare could cost taxpayers $130 million in this fiscal year, and up to $380 million a year over the next five years if enrollment stays on its current path.
The state has touted the fact that it has signed up more people than it originally projected, but higher enrollment comes with higher costs.
Original estimates said enrollment would increase by 477,000. But as of October, 630,609 Michiganians had signed up. That’s 32 percent higher than 2013 projections.
The federal government has picked up most of the cost of the program’s expansion until this year. That reimbursement rate will decrease slightly every year until 2020 and beyond, when the state will be responsible for 10 percent of the Healthy Michigan plan costs.
The governor’s original proposal included the creation of a reserve fund to pay for future costs to the state, but the Legislature ultimately didn’t set specific dollars aside. So the burden could shift to businesses or other taxpayers in the state.
Michigan is part of a nationwide trend of skyrocketing Medicaid costs, according to a recent study by the Foundation for Government Accountability.
On average, the 24 states that accepted Obamacare’s expansion are seeing sign-up rates 110 percent higher than original enrollment projections. Only five and a half million people were projected to sign up for the expanded program, but at least 11.5 million have.
And Michigan is actually faring better than most states. New York has signed up 276 percent more people than projected; California has signed up 322 percent more than projected. Those states are outliers, but most states are seeing current projections 40 to 120 percent higher than thought.
In addition to draining the state’s coffer, higher projections and costs due to larger amounts of able-bodied adults on Medicaid shift money from those who are truly in need of Medicaid’s services.
It’s unclear how the expansion will be affected by Congress’ potential repeal of Obamacare under President-elect Donald Trump.
Medicaid expansion wouldn’t necessarily need to be retracted even if the mammoth health care law is repealed. But federal funding for Medicaid expansion could be withheld, which would leave Michigan in a difficult position.
Since the state’s expansion was voluntary, the Legislature could always repeal it voluntarily as well.
The state’s mounting burden for Healthy Michigan further evidence that Obamacare and the strings attached to it created a health care system with insurmountable costs. Addressing these problems must be a priority for federal and state lawmakers in the new year.