BEYOND THE NUMBERS
Revised Michigan Medicaid Proposal Would Still Reduce Coverage and Access to Care
Update, June 7: We’ve updated this post to reflect House passage of the bill.
The Michigan House has passed a revised version of a bill the Senate passed in April that would take Medicaid coverage away from people who don’t meet a work requirement. While the Senate and Governor Rick Snyder must still sign off on the revised bill, it retains the same core structure as the Senate version, which means it would have the same harmful impacts: large coverage losses and less access to care for low-income Michiganders, higher uncompensated care burdens for hospitals, and increased state administrative costs.
Not only that, the House-approved bill puts Michigan’s entire Medicaid expansion under the Affordable Care Act (ACA) — covering 670,000 people — at risk. That’s because Michigan would be required to end its expansion if the federal Centers for Medicare & Medicaid Services (CMS) doesn’t approve an additional waiver that raises premiums on some Medicaid beneficiaries.
The revised bill makes modest changes to the work requirement. It lowers the number of required work hours from 29 a week to 80 per month; gives enrollees a grace period in which they can fail to meet the work requirement for up to three months of the year and still retain their coverage; removes a rightly criticized provision that would make the requirement less rigid for people in mainly white, rural areas with high unemployment than people in mainly African American, urban areas with equally high unemployment; and exempts from the work requirement very low-income parents who have Medicaid coverage under the state’s eligibility rules from before it expanded Medicaid.
It also adds a harmful new provision raising premiums on beneficiaries with incomes above the poverty line (about $1,000 a month for an individual) — mostly working people in jobs that don’t offer health coverage. They now pay a monthly premium of 2 percent of their income, which is in line with what people with similar incomes pay for coverage in the ACA’s marketplaces in states that haven’t expanded Medicaid. The bill would more than double these premiums to 5 percent of income, or about $50 per month, for people who’ve had Medicaid coverage for more than 48 months — that is, to a level that’s likely unaffordable for many of these individuals. No state has been allowed to charge Medicaid beneficiaries premiums at that level.
Up to 54,000 Michiganders would lose their Medicaid coverage under the revised bill, the Michigan House Fiscal Agency estimates. And that estimate is likely too low. It excludes coverage losses among people subject to higher premiums as a result of the bill, and it apparently assumes that everyone who’s eligible for an exemption from work requirements will secure one when, in reality, many people will likely be stymied by red tape and paperwork.
Those at particular risk of losing coverage include:
- Working beneficiaries with unstable jobs. The industries that commonly employ Medicaid beneficiaries — such as health care, restaurant and food services, and construction — generally have variable hours, above-average levels of involuntary part-time work, and minimal flexibility. This makes it hard for many working people to get the required number of work hours each month to avoid losing coverage.
We’ve shown that 46 percent of low-income workers nationwide who could be affected by Medicaid work requirements would fail to meet a 20-hour-per-week requirement at least one month during the year. Even among people working 20 hours a week on average over the course of the year (1,000 hours for the year), 1 in 4 don’t work 80 hours every month. Among people working in unstable jobs with volatile hours — in industries like retail, home health, and construction — many would fall short of the requirement for multiple months and so would still lose coverage under the revised bill, as would many workers in Michigan’s seasonal tourism industry.
- Older Michiganders. The work requirement would apply to adults up to age 62 unless they qualified for other exemptions. Older adults face special obstacles to meeting work requirements. In particular, people over age 50 are likelier to have a chronic health condition that makes it hard to maintain steady, full-time employment. (And losing coverage will often exacerbate those conditions.)
- People with disabilities and other vulnerable groups. The work requirements in the revised Michigan bill, like proposals in other states, exempt people who are medically frail or have medical conditions that prevent them from working. Still, some people with disabilities and serious illnesses would inevitably fall through the cracks and lose coverage. This could occur because they don’t meet the criteria for limited exemptions, don’t understand that they qualify for an exemption, or struggle to provide the documentation to prove that they qualify. Illustrating the validity of these concerns, studies of state SNAP (formerly food stamps) and Temporary Assistance for Needy Families (TANF) programs have found that people with disabilities, serious illnesses, and substance use disorders are disproportionately likely to lose benefits due to work requirements, even when they should be exempt.
- People with incomes above the poverty line. As noted above, the bill would dramatically raise premiums on people above the poverty line. Premiums prevent many low-income people from maintaining coverage, research shows. Roughly 35,000 people would face these higher premiums, the House Fiscal Agency notes, and would be in danger of losing their coverage.
Coverage losses would occur in all parts of the state. In fact, because the bill’s sponsors have removed the work requirement’s controversial exemption for mainly white, rural counties with high unemployment, the rigid requirement would now apply to more people. Every Michigan county except one has experienced a drop in its uninsured rate of at least 40 percent since the state expanded Medicaid in 2014, as we’ve shown, and under the revised bill all parts of the state would experience coverage losses.
These coverage losses will set back Michigan’s progress in improving access to care and health. In addition, the revised bill would lead to:
- New state administrative costs. Michigan would spend $10 million a year to administer the work requirement, the state’s House Fiscal Agency estimates, in addition to up-front costs for new technology.
- Higher uncompensated care costs. Michigan hospitals saw a 57 percent drop in uncompensated care costs as a share of their budgets as the state’s Medicaid expansion took effect, a recent report found. A work requirement leading to large coverage losses could reverse a large share of that progress. In analyzing the previous version of the bill, the Senate Fiscal Agency noted that coverage losses under the bill “could lead to an increase in uncompensated care, especially at hospitals. This would lead to a negative State or local fiscal impact for public hospitals.”
Michigan’s Medicaid expansion has produced large coverage gains, a sharp drop in the uncompensated care its hospitals provide, and savings to the state’s budget. If Governor Snyder signs this bill into law, these gains will erode.