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It's almost time for Michigan to start sharing Medicaid expansion costs

Feb 23, 2016

Gov. Snyder's proposed budget would set aside over $100 million for the Healthy Michigan plan.
Credit Zoe Clark / Michigan Radio

Gov. Rick Snyder’s new budget contains over $100 million for Healthy Michigan.

That’s a reminder that it’s time for the state of Michigan to pony up some of the Medicaid expansion program’s operation cost. That Healthy Michigan program means health insurance for some 600,000 lower-income Michiganders.

Marianne Udow-Phillips is with the Center for Healthcare Research and Transformation. She tells us that under the Affordable Care Act with the expansion of Medicaid, the federal government covered 100% of the costs for the 2014, 2015 and 2016 calendar years. Starting next year, she says “the state has to start paying a little bit.”

She explains that the state will be responsible for 5% of the cost the first year, and that amount will gradually increase year over year until 2020, when the state will have to pay 10% of the cost.

"By the time we get to 2020, it would cost the state about $62 for every person that gets covered under the Healthy Michigan plan."

According to Udow-Phillips, the governor’s budget will be adequate to cover these costs.

“The state match, the $108 million, is actually matching $3.4 billion from the federal government for the Medicaid program. That is enough to cover all the individuals that we have currently enrolled and that we expect will continue to be enrolled in the plan,” she says.

That $108 million still needs the approval of the Legislature, and Udow-Phillips tells us there are some legislators who don’t seem to want to commit to the plan. That said, she believes the majority of legislators will support the proposal “because the state is still getting savings from the general fund as a result of this federal contribution.”

She explains that the state has had to use general fund dollars to pay for a lot of services in the past, particularly mental health care. With the federal government taking on a chunk of that burden, Michigan will have some room to sock some money away.

Udow-Phillips expects that the state will continue to save money until 2020, when it takes on that 10% of the cost. At that point she says Michigan will probably be paying a little bit more for the program than the net savings, “but again, relatively low cost for people who are getting coverage.”

“We estimated that by the time we get to 2020,” she says, “it would cost the state about $62 for every person that gets covered under the Healthy Michigan plan.”

If at some point along this process this budget proposal gets rejected or jammed up by the Legislature, Udow-Phillips tells us the Healthy Michigan plan would end and some 600,000 people would lose their health care coverage.

Marianne Udow-Phillips tells us more about the state of Medicaid in Michigan in our conversation above.