Politics & Government
5:41 pm
Tue October 16, 2012

Expanding Medicaid would save Michigan $1 billion over10 years, study finds

Over 10 years, Michigan could save a billion dollars and get more than 600,000 previously uninsured people health coverage.

That's the upside of expanding Medicaid in Michigan, according to a new study from the Center for Healthcare Research and Transformation (CHRT) in Ann Arbor. 

The federal government can't force states to expand their programs, but they are offering big incentives: for 10 years, the feds will pick up 100% of the costs of covering newly-eligible Medicaid patients, as part of the Affordable Care Act. 

And when you think of all the unpaid medical bills that uninsured patients rack up, putting those people on Medicaid instead just makes financial sense, says CRHT's director,  Marianne Udow-Phillips, the Center's director. 

"Many of these people get some form of care today. But they get the care in the most expensive setting possible: they get the care in the emergency room of the hospital. That's a bad way to get care, and it's a expensive way to get care."

Instead, Medicaid coverage would mean some 600,000 Michiganders could now get health coverage, including preventative care, according to CRHT's study. That's where they say Michigan will save the state $1 billion over 10 years. 

But other states haven't come to such rosy conclusions. Arkansas, for example, found that after those first ten years, when the federal government scales back to covering just 90% of those newly-eligible patients, the picture changes. 

That's when their costs would get bigger than their savings. If Arkansas expands Medicaid, their study finds, then 10 years down the road they'll be covering 10% of those newly-eligible patients.

But on top of that, they'll also be covering patients who were always eligible for Medicaid, yet may only come out of the woodwork when everyone starts talking about expanding benefits. And third, the state may also have bigger administrative costs as their Medicaid program booms. 

Add it all up, and Arkansas found that those costs outstripped the savings. 

Whether this would apply to Michigan's situation as well isn't discussed in this new study, but it is the kind of discussion that state policymakers and health administrators are having.* 

Correction: CHRT says that the full study does, in fact, address what happens to those savings when the feds scale back to cover 90% of the newly-eligible Medicaid patients. Director Marianne Udow-Phillips writes in an email:

"That question actually is discussed in our study.  Our study covers 10 years – from 2014 through 2023, actually a longer period than the Arkansas study.  And, our study does show that there are costs net of savings to the state of Michigan starting in 2020 but the costs are very low – only $83 per covered individual per year in 2023 – a very good deal.  We do have some methodological differences with the Arkansas study which I can walk you through but the fundamental conclusion isn't far different – it is still a good deal any way you look at it."