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State of Michigan should take pass on expanding Medicaid

Another opinion

August 5, 2012
The Detroit News

Gov. Rick Snyder correctly has decided against shrinking Michigan's Medicaid program in the wake of the U.S. Supreme Court's federal health care decision, but adding 400,000 or more Michiganians to the rolls is another matter.

It looks like Medicaid expansion envisioned under Obamacare could force the state to spend hundreds of millions of additional dollars a year on health care for folks earning a little more than the federal poverty wage.

That wouldn't happen right away. A Senate Fiscal Agency analysis, in fact, illustrates how the state could expand its Medicaid coverage while saving something like $200 million annually for a few years by transferring some current mental health expenditure to the new program.

The federal act would snare Michigan after 2020, however, when the state would have to put up 10 percent of the cost for its broadened Medicaid customer base. (The federal government is to cover all new Medicaid costs for the first three years of the act, after which states must kick in a share that gradually grows to 10 percent.)

The lurking longer-term state obligation makes Medicaid expansion distinctly different from state health exchanges mandated by Obamacare. We've agreed that Snyder's proposal for a simple website, where consumers could shop for medical coverage set up at federal expense with no real risk to the state, is a no-brainer and should be approved by lawmakers.

Obamacare obviously is complex. The Supreme Court decision only made it more complicated.

The justices, while upholding the act 5-4, struck down provisions that would have imposed severe financial penalties on states that don't broaden their Medicaid coverage to include people with incomes up to 133 percent of the federal poverty level ($14,856 for a single person; $30,056 for a family of four).

The ruling seems to free states not only to avoid a Medicaid expansion - as Texas Gov. Rick Perry already has decided - but also to give them the option to rescale their existing programs.

Snyder was quick to say he doesn't intend to shrink Michigan's Medicaid coverage, but he'll take his time deciding whether to expand it. The governor is a guy who likes to run the numbers.

Meanwhile, the Senate Fiscal Agency issued a memo in which it concluded that the decision about expanding Medicaid in Michigan is more about policy than fiscal considerations. Here's why: the Fiscal Agency said the state can offload about $200 million it's now spending per year on mental health services to people who'd become eligible for expanded Medicaid under the federal act; and by the time Michigan had to start paying its 10 percent of the expanded Medicaid cost, its accumulated savings would be somewhere near $1 billion.

But the costs of federal health entitlements always gallop so rapidly they outstrip projections made by economists.

Michigan's expense for the added 400,000 folks on Medicaid after 2020 is likely, at some point, to greatly exceed the savings it gets from transferring some of its mental health care costs.

We like the governor's way of calling the shots based on what makes sense financially, rather than partisan politics. That's more likely to yield policies most beneficial to our state.

It's possible he'll come to a different conclusion about Medicaid, but to us, it looks like the proposed expansion involves risks that Michigan might want to bypass.



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