Gov. Rick Snyder today announced that his fiscal year 2014 budget recommendation includes an expansion of Michigan's Medicaid program, benefitting about 320,000 residents in the first year alone. Snyder was joined at Sparrow Hospital by health care and business leaders who applauded the decision.
Snyder's initiative, which is in accordance with the federal Affordable Care Act, contains safeguards that ensure the program's financial stability and protect against changes in Washington's commitment.
"This makes sense for the physical and fiscal health of Michigan," said Snyder, who studied the issue thoroughly before arriving at his decision. "Expansion will create more access to primary care providers, reduce the burden on hospitals and small businesses, and save precious tax dollars. It also puts Michigan rather than Washington in the driver's seat in terms of implementation, which allows us to better address Michigan's specific needs."
Expanding Medicaid to cover up to 133 percent of the Federal Poverty Limit means that routine and preventative health care will be provided to about 320,000 Michiganders in the first year. More than 470,000 will be covered by 2021, reducing the amount of Michigan's uninsured by about 46 percent.
Creating access to primary care providers reduces more costly emergency room visits and decreases hospitals' uncompensated costs. A recent study estimates that Michigan will save $351 million by 2022.
More than $20 billion will flow into Michigan through 2023 by leveraging the federal funds made available through the Affordable Care Act. In addition, the state's General Fund will see $1.2 billion in savings through 2020.
"While this is a federal program that we would not have necessarily created for Michigan, it is critical that the state control its implementation," Snyder said. "Failure to go through with the expansion means that Michigan tax dollars will go to cover health care costs for other states that do take part. We can ensure the program remains financially stable and guard against changes in the federal commitment."
The governor's budget recommendation calls for a deposit of 50 percent of the savings achieved from the expansion to be deposited into a special health savings account for the first seven years, through 2020. The account will help cover the increased share of the costs when the federal government scales back its funding from 100 percent for the first three years to 90 percent beginning in 2020.
Reducing the number of uninsured will ease the burden on job providers, who will be subject to federal penalties beginning in 2014 if they do not offer affordable health care options for employees. In addition, employees who have access to preventative care miss less work due to illness, resulting in a more productive work force.
"The relationship between a patient and doctor is very important," Snyder said. "Before making this recommendation, I had to be assured that the existing network of primary care physicians is equipped to handle an influx of patients."
A statewide survey conducted by the Center for Healthcare Research and Transformation showed conclusively that Michigan has the necessary capacity. It confirmed that 81 percent of Michigan's primary care physicians will have the capacity for those who are newly covered by Medicaid. Of that group, more than 90 percent said they will accept new Medicaid patients.
Funding for Michigan's prisons also is expected to decrease as improved access to behavioral health services reduces recidivism and the overall number of inmates. Even a modest reduction in recidivism will save the state more than $100 million over 10 years.
"We know that the use of emergency rooms by the uninsured population is incredibly costly to Michigan hospitals and taxpayers," said James K. Haveman, director of the Michigan Department of Community Health. "Governor Snyder's decision to expand Medicaid in Michigan makes sound sense for not only the financial health, but also the physical health of our state. By providing proper primary care, we can reduce the costs, and improve the overall health of our residents."
Health care, business, consumer, and human service organizations attending Snyder's announcement are: AARP Michigan, Michigan Association of Community Mental Health Boards, Michigan Association of Health Plans, Michigan Health & Hospital Association, Michigan Osteopathic Association, Michigan Primary Care Association, Michigan State Medical Society, and the Small Business Association of Michigan.
"As a safety net of providers serving many of Michigan's underserved areas and populations, Michigan's Community Health Centers see every day the positive difference early and preventive care can make in people's lives and the money saved by keeping them out of emergency rooms," said Kim Sibilsky, executive director of the Michigan Primary Care Association. "Expanding health care coverage to more of our fellow Michigan residents who are uninsured today is a tremendous opportunity to improve the physical, mental, and fiscal health of our state. The bottom line is that expanding eligibility for coverage in the state's Medicaid Program will save lives, save money and lead to a healthier population."
For more information and materials on Medicaid expansion in Michigan, visit michigan.gov/mibudget2014.