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February 6, 2020

Medicaid isn’t broken. Why do we keep trying to fix it?

Key Takeaways

  • A new federal proposal could fundamentally change the way Medicaid is financed, leading to coverage loss and financial troubles in Michigan.
  • Experts concur that Medicaid expansion, aka Healthy Michigan, has brought numerous benefits to the State, including better health for the population, cost savings for hospitals and state governments, and overall economic benefits.
  • New research demonstrates that the health care access facilitated by Medicaid is a key ingredient in workforce development and economic growth strategies.

Last month, Michigan became one of the first states to experiment with implementing work requirements for Medicaid beneficiaries, a policy change enabled and promoted by the Trump administration. Even though it is far too early to fully assess their impact, federal health officials have unveiled another dramatic policy change that would fundamentally alter (read: restrict) Medicaid eligibility and funding.

Given the widely documented success of Medicaid expansion, it is difficult to identify the problem(s) these policy changes are meant to solve. Fortunately for policymakers, there is a useful adage for instances like this: If it ain’t broke, don’t fix it.

Doing for the sake of doing: an epidemic of the unnecessary

The vast amount of unnecessary care that is delivered in the U.S. health care system is stunning. This includes tests, procedures, and prescriptions that aren’t needed, but are nonetheless consumed due to some combination of factors, such the patient’s perception that more care equals better care, or the physician’s fear that the smallest oversight could result in a costly malpractice lawsuit. At best, this is a huge waste of money (costing the U.S. hundreds of billions of dollars annually), and at worst, also inadvertently harms people in the process (since no care is entirely without risk).

In politics, there is a similar preponderance of unnecessary activity. Policies are often changed based on perception or ideology rather than data-driven analysis. As it is in health care, unnecessary changes to policy are at best, wasteful and inconvenient, and at worst, threaten to inflict harm upon the public through unintended consequences.

More (unnecessary) changes to Medicaid

On January 30, federal health officials announced a new opportunity for states to bypass the longstanding Medicaid rules that govern access and quality. The suspension of rules would be granted in exchange for states accepting a new aggregate or per-capita cap financing model (i.e., a block grant) for state Medicaid programs.

This new policy guidance has been dubbed the Healthy Adult Opportunity (HAO) initiative. States submitting an HAO waiver would have a cap placed on federal funds available to finance Medicaid. Funding would not increase even if demand for Medicaid services went up (e.g., during the next recession); to stay under the funding cap, states would be expected to reduce the number of services covered by Medicaid and limit the number of people who qualify. 

Some have criticized the Orwellian character of the “Healthy Adult Opportunity” moniker, pointing out that the only opportunity is for states to deny low-income adults access to previously available health insurance; for Michigan, block granting Medicaid is also an opportunity to undermine an efficient, effective, and broadly beneficial public program.

When former Governor Snyder signed into law the Healthy Michigan plan, the state’s Medicaid expansion under the Affordable Care Act in 2013, he and his health chiefs in the Michigan Department of Health and Human Services predicted that the plan would “improve health and quality of life in Michigan, save taxpayer money, [and] boost the economy.” Our extensive research in 2017 found that each of these predictions proved to be true: Medicaid expansion has been a cost-effective means to improve health while creating a simultaneous economic stimulus. As more states have expanded their Medicaid programs, the success of this aspect of the Affordable Care Act has only become clearer.

Recent research from the University of Michigan’s Institute for Healthcare Policy and Innovation continues to reveal positive results from Michigan’s Medicaid expansion; the Healthy Michigan plan has improved access to primary care and preventative services and most enrollees working with primary care providers also made commitments to healthier behaviors, such as improved nutrition or physical activity. By reducing emergency room utilization and guiding people to high-value preventative services, Medicaid expansion maximizes the positive health impact of each dollar spent.

Medicaid and the Workforce

Our newly-released report, Overcoming Barriers for the Underemployed, found that a variety of health issues create barriers for many people in Michigan who could either reenter the workforce or advance in their employment. The report concluded that Medicaid generally—and the Healthy Michigan plan specifically—is an essential part of workforce development. Research published in the Journal of the American Medical Association supports this conclusion, finding that people enrolled in Healthy Michigan achieved greater increases in employment and job training than occurred among the state’s low-income population overall and among the total population more generally.

According to Renu Tipirneni, MD, MSc, assistant professor of internal medicine at the University of Michigan: “The ability to get access to care, attention for existing or new health issues, and to gain function, appears to have a clear impact on the chances of getting a job or studying or training to get a job later.” 

Therein lies the rub of these policy changes to reduce Medicaid enrollment.

Advocates of restricting Medicaid eligibility often express fear that publicly funded access to health care acts as a disincentive for people to get out and get to work. Research suggests the opposite: by providing needed supports to people (such as treatment for diabetes, depression, or a substance use disorder), barriers to work are broken down and people are more likely to find jobs. As we’ve previously written: a healthy population and a productive workforce are each important needs for society—they need not be mutually exclusive.

If policymakers are interested in workforce development, they should carefully and clearly identify the barriers to work that exist in the state, and then modify policy only as much as is needed to correct the ongoing economic and social failures hindering workforce participation and productivity. As it happens, the Citizens Research Council has a report for that. If instead the major policy concern is budgetary pressures and fiscal responsibility…well, we have reports for that too.

Purposeful policymaking is the quintessence of good government. So, once again (for the folks in the back of the legislative chambers and executive offices):

If it ain’t broke, don’t fix it.

 

 

Research Associate

About The Author

Tim Michling

Research Associate

Tim joined the Citizens Research Council in 2016 after working for several years as a legislative aide in the Michigan House of Representatives, as well as lecturing at Oakland University and the University of Michigan – Flint. Tim earned both a Master of Public Administration degree and a Master of Public Health degree (forthcoming) from Wayne State University. He received a Bachelor of Arts degree in History from the University of Michigan – Ann Arbor. Tim’s primary focus is health policy.

Medicaid isn’t broken. Why do we keep trying to fix it?

Key Takeaways

  • A new federal proposal could fundamentally change the way Medicaid is financed, leading to coverage loss and financial troubles in Michigan.
  • Experts concur that Medicaid expansion, aka Healthy Michigan, has brought numerous benefits to the State, including better health for the population, cost savings for hospitals and state governments, and overall economic benefits.
  • New research demonstrates that the health care access facilitated by Medicaid is a key ingredient in workforce development and economic growth strategies.

Last month, Michigan became one of the first states to experiment with implementing work requirements for Medicaid beneficiaries, a policy change enabled and promoted by the Trump administration. Even though it is far too early to fully assess their impact, federal health officials have unveiled another dramatic policy change that would fundamentally alter (read: restrict) Medicaid eligibility and funding.

Given the widely documented success of Medicaid expansion, it is difficult to identify the problem(s) these policy changes are meant to solve. Fortunately for policymakers, there is a useful adage for instances like this: If it ain’t broke, don’t fix it.

Doing for the sake of doing: an epidemic of the unnecessary

The vast amount of unnecessary care that is delivered in the U.S. health care system is stunning. This includes tests, procedures, and prescriptions that aren’t needed, but are nonetheless consumed due to some combination of factors, such the patient’s perception that more care equals better care, or the physician’s fear that the smallest oversight could result in a costly malpractice lawsuit. At best, this is a huge waste of money (costing the U.S. hundreds of billions of dollars annually), and at worst, also inadvertently harms people in the process (since no care is entirely without risk).

In politics, there is a similar preponderance of unnecessary activity. Policies are often changed based on perception or ideology rather than data-driven analysis. As it is in health care, unnecessary changes to policy are at best, wasteful and inconvenient, and at worst, threaten to inflict harm upon the public through unintended consequences.

More (unnecessary) changes to Medicaid

On January 30, federal health officials announced a new opportunity for states to bypass the longstanding Medicaid rules that govern access and quality. The suspension of rules would be granted in exchange for states accepting a new aggregate or per-capita cap financing model (i.e., a block grant) for state Medicaid programs.

This new policy guidance has been dubbed the Healthy Adult Opportunity (HAO) initiative. States submitting an HAO waiver would have a cap placed on federal funds available to finance Medicaid. Funding would not increase even if demand for Medicaid services went up (e.g., during the next recession); to stay under the funding cap, states would be expected to reduce the number of services covered by Medicaid and limit the number of people who qualify. 

Some have criticized the Orwellian character of the “Healthy Adult Opportunity” moniker, pointing out that the only opportunity is for states to deny low-income adults access to previously available health insurance; for Michigan, block granting Medicaid is also an opportunity to undermine an efficient, effective, and broadly beneficial public program.

When former Governor Snyder signed into law the Healthy Michigan plan, the state’s Medicaid expansion under the Affordable Care Act in 2013, he and his health chiefs in the Michigan Department of Health and Human Services predicted that the plan would “improve health and quality of life in Michigan, save taxpayer money, [and] boost the economy.” Our extensive research in 2017 found that each of these predictions proved to be true: Medicaid expansion has been a cost-effective means to improve health while creating a simultaneous economic stimulus. As more states have expanded their Medicaid programs, the success of this aspect of the Affordable Care Act has only become clearer.

Recent research from the University of Michigan’s Institute for Healthcare Policy and Innovation continues to reveal positive results from Michigan’s Medicaid expansion; the Healthy Michigan plan has improved access to primary care and preventative services and most enrollees working with primary care providers also made commitments to healthier behaviors, such as improved nutrition or physical activity. By reducing emergency room utilization and guiding people to high-value preventative services, Medicaid expansion maximizes the positive health impact of each dollar spent.

Medicaid and the Workforce

Our newly-released report, Overcoming Barriers for the Underemployed, found that a variety of health issues create barriers for many people in Michigan who could either reenter the workforce or advance in their employment. The report concluded that Medicaid generally—and the Healthy Michigan plan specifically—is an essential part of workforce development. Research published in the Journal of the American Medical Association supports this conclusion, finding that people enrolled in Healthy Michigan achieved greater increases in employment and job training than occurred among the state’s low-income population overall and among the total population more generally.

According to Renu Tipirneni, MD, MSc, assistant professor of internal medicine at the University of Michigan: “The ability to get access to care, attention for existing or new health issues, and to gain function, appears to have a clear impact on the chances of getting a job or studying or training to get a job later.” 

Therein lies the rub of these policy changes to reduce Medicaid enrollment.

Advocates of restricting Medicaid eligibility often express fear that publicly funded access to health care acts as a disincentive for people to get out and get to work. Research suggests the opposite: by providing needed supports to people (such as treatment for diabetes, depression, or a substance use disorder), barriers to work are broken down and people are more likely to find jobs. As we’ve previously written: a healthy population and a productive workforce are each important needs for society—they need not be mutually exclusive.

If policymakers are interested in workforce development, they should carefully and clearly identify the barriers to work that exist in the state, and then modify policy only as much as is needed to correct the ongoing economic and social failures hindering workforce participation and productivity. As it happens, the Citizens Research Council has a report for that. If instead the major policy concern is budgetary pressures and fiscal responsibility…well, we have reports for that too.

Purposeful policymaking is the quintessence of good government. So, once again (for the folks in the back of the legislative chambers and executive offices):

If it ain’t broke, don’t fix it.

 

 

Research Associate

About The Author

Tim Michling

Research Associate

Tim joined the Citizens Research Council in 2016 after working for several years as a legislative aide in the Michigan House of Representatives, as well as lecturing at Oakland University and the University of Michigan – Flint. Tim earned both a Master of Public Administration degree and a Master of Public Health degree (forthcoming) from Wayne State University. He received a Bachelor of Arts degree in History from the University of Michigan – Ann Arbor. Tim’s primary focus is health policy.

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