Investigative
8:25 am
Wed January 19, 2011

Medicaid-welfare cuts could cost Michigan

There are close to 10-million people in Michigan.  And almost three-million are now receiving some kind of state assistance.  Half of them are children.

“A lot of them are my next-door neighbors.  It’s bad in Michigan right now.  And people are in a position where they’ve never been," says Becky Clark, who works with the Michigan Department of Human Services in Lenawee County.

Forget what you think you know about the cliche “welfare queens driving welfare Cadillacs.”   That’s not what’s happening in Michigan.  More than a million of those three million people are new to the welfare rolls since the recession started in 2008.

Clark explains the state is facing a new challenge in public assistance.

“True there are some people who have been receiving welfare benefits for a good part of their lives for one reason or another, but there are many people who’ve lost their jobs and never expected in a million years that they’d be in this position,” Clark says.

Maybe they didn't expect, but here they are, three out of ten people in Michigan.  Many of them have held jobs all of their lives, paid their taxes and then their job disappeared.  Now unemployment benefits have run out, some of them are losing their homes to foreclosure and they have no where else to turn except welfare programs and Medicaid.

The new Speaker of the House, Jase Bolger, believes Michigan is creating a cycle of dependency on welfare.  He wants to limit lifetime enrollment in benefits to four-years and to enforce that retroactively.  Currently the lifetime limit is five years, but there are a certain number of families exempt from the limit because of dire circumstances. 

It’s not clear how many families would be kicked off the welfare rolls if the retroactive four year limit is approved. 

Speaker Bolger says the state could save $45-million by eliminating people who've been on assistance for four years or more.

But it's not clear that Michigan really would save $45-million.

That’s because for many programs, Michigan gets more money from the federal government than the state puts in.

For example, Medicaid.  Michigan gets a lot more money from the feds.

David Seaman is with the Michigan Health and Hospital Association.

“Michigan’s economy is so soured right now that we have one of the highest matching formulas in the United States.  So, we don’t get one dollar for one dollar.  We currently get $2.48 for every dollar we invest.  So, it’s an excellent investment,” Seaman says.

There are some optional Medicaid programs Michigan could cut, such as prescription drugs.  Michigan does not have to provide drug coverage.  But there are consequences if it were cut.

Mitch Bean is the Director of the House Fiscal Agency.  He’s one of the people keeping tabs on the Michigan budget. 

“You have to wonder, if somebody’s going to be covered by health care, but they can’t get prescription drugs, what kind of an impact is that going to have on health care,” Bean asks.

In other words, what good does it do to find out from the doctor what ails you if you can’t afford the cure?

And David Seaman at the Michigan Health and Hospital Association saysfor a person with a chronic disease, such as diabetes, cutting prescription drug coverage could end up costing taxpayers a lot more in the long run.

“The reality is if you cut prescriptions, what you’ll see now in hospitals, in emergency rooms will be people who for a $100 a month in prescription medication will now have to come in, they’ll have a ten-day stay, including an amputation of a limb, prostheses and the loss of productivity.  We’ll continue to pay services for them for the rest of their lives.  I guess we’d describe that as penny-wise and pound foolish,” Seaman says.

Another Medicaid area that is optional for Michigan is mental health services.  While he was on the campaign trail, now-Governor Rick Snyder indicated he could see how spending some on mental health services now could save money in the long run.  He says he believes we’ve already cut back too much.

“If we did a better job on frontline mental health services, you have an opportunity to actually help individuals then be successful, to hold a job, to be a taxpayer, to be a part of society.  By not helping them, by leaving them without assistance in terms of some good, professional help, you put them on one of two paths:  they end up on an acute care hospitalization path where they end up in multiple ER visits, hospitalization and/or homelessness; more likely, they end up in the Corrections system.” Snyder explained.

Others are also concerned about those long-term consequences.  Gilda Jacobs heads up the Michigan League for Human Services.  She says if you cut public assistance to people who need help now, often you pay more in the long run.  Jacobs says in this terrible economy, some people just need a little help now to get back on track.

“They’re not going to be able to get out of this cycle of poverty because we’re taking away some of the necessities that they need to be successful in life.  Goes back to pay now or pay later,” Jacobs says.

A former legislator, Jacobs says too many of the members in the Michigan legislature have bought into that welfare-queen-driving-a-Cadillac myth.

“The decisions that they make that might be based on some philosophical view that they have is going to affect the people that live in their districts, the people that live around the block from them.  Because right now the people who are losing their homes are not just somebody else in a bad neighborhood in Detroit; it’s their neighbor, it’s their cousin, it’s their parent, it’s their son,” said Jacobs.

She believes cutting benefits to those people will hurt them and it will further hurt the state budget because it loses those federal matching dollars.

Michigan is already a donor state.  That is, Michigan taxpayers send more money to the federal government than we get back.  Cutting Medicaid and welfare spending at the state level will only result in losing more federal dollars coming back to the state.  That could put the state in worse financial shape the next year and at the same time hurt out-of-work citizens.

Breanna Camarillo is a reporter for the Gongwer News Service.  Part of her job is to cover the agencies that provide public assistance to the people out of work and the working poor.  She says because of term limits, many of the inexperienced legislators don’t realize the greater costs of cutting money for Medicaid and welfare programs.  And she believes there are a few in the legislature who do know the costs, but for cynical political reasons are willing to cut anyway.

“Especially if it’s in their party’s best interest to do so, they will present a budget that they know risks, at least, federal money because it’ll become so convoluted down the line, you know, their budget cuts money which sacrifices federal money, but nobody understands that.  Nobody makes that connection,” Camarillo says.

It's quite a set-up.  You tell the voters you cut the budget and then later complain about how the federal government failed the state, never mentioning that your cuts caused the problem.  Pretty slick.

Cutting benefits will certainly get some of those families out of that “cycle of dependency.”   They won’t be able to depend on Michigan’s social safety net.  It will mean if they can’t find a job, those families won’t have food, or heat or medicine even if they’re among the workers who paid into the system for decades.

And in Michigan, with more unemployment benefits set to expire, thousands more people will be looking to the state for a little help, a little assistance until they can reinvent their lives by switching careers or getting more skills.