One in four Michigan residents, nearly 2.5 million people, receive health care coverage through Medicaid. More than 40 percent of all births in the state are covered by the federal insurance.
So it’s unsurprising that changing eligibility rules, and requiring recipients to work, would cause controversy. The Republican-led plan has attracted national attention in part because its widespread effects, and potential to unspool a key component of the Affordable Care Act.
Proponents say the requirement would encourage more recipients to work, boost a tight labor market and save taxpayers money by moving people off the Medicaid rolls.
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The reforms are still a work in progress. Bills originally required recipients to work 29 hours per week, but the requirement could drop to 20 hours per week. Likewise, a controversial exemption to counties with high unemployment rates reportedly will be dropped.
Today, Bridge Magazine looks at key arguments framing the debate, exploring three key questions through a series of maps and charts: Who would be affected? Would it save money? And would it help people get jobs?
The answers, perhaps unsurprisingly, are murky.
Big program, many recipients
Medicaid provides health care coverage for nearly 2.5 million people in Michigan. Of those, 700,000 were added with the expansion allowed by the Affordable Care Act (commonly referred to as Obamacare). Recipients typically must meet income qualifications. They range from the elderly and disabled to children in poverty and adults. Individuals with incomes of $16,000 and families of four making $33,400 are eligible.
Michigan annually spends $16 billion on Medicaid care. Most of the money comes from the federal government, with $4 billion coming from state sources. Half of that, roughly $2 billion, comes from general taxes.
To help visualize the impact of the changes, Bridge is illustrating the Medicaid population with blocks.
Each block represents 25,000 people. Here is what 2.5 million recipients looks like:
The proposed work rules would require recipients to get a job, go to school, receive job training or work at unpaid internships. But the requirements include plenty of exemptions.
First up: The proposal would only affect adults. More than a third of all Medicaid recipients – nearly 1 million people – are younger than 19 and would be exempt.
That leaves just over 1.5 million adults who could face work requirements.
Elderly, disabled exempt too
Though most seniors are covered by Medicare, thousands are still covered by Medicaid. Combined, the aged, blind and disabled comprise nearly 490,000 of the Medicaid population .
They also would be exempt. That leaves about 1 million recipients who would face the work rules.
Pregnant women, caregivers exempt
Pregnant women and those caring for young children would also be exempt. This is the hardest number to estimate, legislative analysts say. But both the Senate and House fiscal agencies believe as many as 300,000 women and caregivers would be exempted.
That leaves 700,000 people who would face work rules.
Many already working
By all accounts, many Medicaid recipients are already working, though there’s no way to determine how much or how many hours. But if they make more than $16,146 as an individual or $21,900 as a couple, they wouldn’t be eligible.
A University of Michigan survey of recipients of the Medicaid expansion shows nearly half are already working. Another 11 percent said they were too disabled to work.
That leaves 461,000 affected by the work requirements.
Rural counties were slated for a pass too
Bill backers originally wanted to exempt recipients who live in counties with unemployment rates over 8.5 percent.
In March, that covered 17 northern Michigan counties where 3.3 percent of the state’s Medicaid population live. The exemption would not go away until unemployment in those counties hit 5 percent (which in many has not happened since 2000.)
The exemption has proved so controversial that the bill’s main sponsor, Sen. Mike Shirkey, R-Clarklake, told Michigan Radio last week that he intends to remove it. On Monday, he told the Associated Press that Gov. Rick Snyder persuaded him to drop the provision because "tracking the unemployment rate in all 83 counties on an ongoing basis every month would have become an administrative nightmare."
Had the 17 counties with high unemployment been exempted, that would have left an estimated 446,000 facing work requirements.
Nearly 45 percent of all Medicaid recipients are in Metro Detroit, which comprises 39 percent of the state’s population.
A rough estimate means 128,000 people in Wayne County would face work requirements, and 35,000 to 36,000 in both Oakland and Macomb counties.
Across the state, the work rules would affect 26,500 in Kent County (home of Grand Rapids) and 25,000 in Genesee (home of Flint).
Shirkey has said his motivation is strictly philosophical. Last month, he told Bridge able-bodied people who receive government assistance should work.
But other proponents have cited cost as a factor. The Michigan Chamber of Commerce claims Medicaid, because of the Obamacare expansion, is “over enrolled and underfunded.”
The state currently spends about $4 billion on Medicaid. About half of that comes from tobacco taxes, money from a national settlement with tobacco companies, and taxes on health-care providers.
The other $2 billion comes from the general fund, an amount equal to that spent on the prison system and on and colleges and universities.
State spending on Medicaid has grown in the last few years and is scheduled to rise in the next year.
Medicaid funding in Michigan
The federal government covers 71 percent of Medicaid funding in Michigan, including 95 percent of the cost of Medicaid expansion. General taxes cover $3.2 billion (17 percent). Another $2.3 billion (12 percent) comes from tobacco taxes, taxes on health-care providers and money from the national tobacco settlement.
The state spends about $4,300 per adult on Medicaid, and Senate and House fiscal analysts believe between 5 to 15 percent of eligible adults would be taken off the rolls.
(Other states, including neighboring Indiana, have recently added work requirements in response to a Trump administration decision in January to allow states to impose the requirements. But none of the programs has been in place long enough to see how many leave the program.)
One of the reasons the savings isn’t greater is work requirements would cost money to implement.
Analysts say it would cost at least $17.5 million to as much as $70 million to buy computer software and administer work requirements: State workers would have to monitor the program to ensure compliance.
And if Michigan reduced payouts for care, it would trigger other increased costs and lower tax revenues.
For instance, if payouts to doctors and hospitals decline, Medicaid tax revenue (the state levies a tax on providers) from health-care providers would decline as well, the fiscal analysts said.
And other costs could potentially climb as well. Patients might seek disability coverage, which provides more costly care, and hospitals would see increased claims for uncompensated care. And recipients seeking work would create more demand for other state subsidized services for the poor, including child-care and workforce development.
Where would they work?
The Michigan Chamber of Commerce has supported efforts to add work requirements in part to help the state’s labor market.
"Michigan is currently experiencing a workforce shortage and talent gap and estimates suggest that as many as 100,000 jobs are currently unfilled," said Wendy Block, senior director of health policy, human resources and business advocacy for the chamber.
It’s not clear how many current Medicaid recipients are already looking for work or if they’re qualified for the jobs that are available.
In some parts of Michigan, mainly west Michigan, unemployment has been below 4 percent for over a year and “Now Hiring” signs are ubiquitous. But could all those openings absorb the Medicaid population seeking work?
In Kent County, unemployment rates have been below 4 percent for 10 of the last 12 months. In March it was 3.4 percent, with an estimated 12,200 people still looking for work.
If the work requirements provision became law, that could mean as many as 26,500 Medicaid recipients would be required to join the workforce in Kent County, more than tripling the pool of job seekers. In neighboring Ottawa County, it could double the number of people seeking work.
And across the state in Wayne County, the number of Medicaid recipients likely required to start a job search – nearly 128,000 – is more than three times bigger than the number of people already looking for work (over 39,000).
With unemployment at 5 percent, and ignoring the troubles with public transportation, many of those would-be workers are in Detroit and the jobs are in the suburbs. Could the workers find the jobs?
The Senate bill was approved by 26-11 on April 19, and it is now in the House for consideration. It has been referred to the appropriations committee.Through a spokesman, Snyder has said he would be in favor of the rules “if done responsibly.”
Snyder pushed the legislature in 2013 to expand Medicaid through the Affordable Care Act and now roughly 700,000 more people have coverage through the program.
House Speaker Tom Leonard, who supports the requirements, has said any differences between Snyder and the Senate version must be ironed out before the House takes it up.