Options for Managing Medicaid Funding and Cost Growth

Report 376, February 2012

Nearly 1 in every 5 Michigan residents is currently enrolled in Medicaid – a state operated medical insurance program for low income individuals and families that is co-financed by the state and federal governments. Because of the state’s nearly decade long recession beginning in Fiscal Year 2002, demand for this program increased, growing enrollment nearly 60 percent. In the current fiscal year, over 15 percent of Michigan’s spending from state sources is appropriated to Medicaid, up from less than ten percent a decade ago and despite a nearly 16 percent decline in real total state spending from state sources. As a result, while Medicaid’s budget increased 30 percent in inflation adjusted terms, most other state budget areas declined: revenue sharing for local governments (-47.0 percent); higher education (-45.4 percent); community colleges (-25.7 percent); human services (-21.3 percent); K-12 school aid (-21.2 percent); and corrections (-2.3 percent).


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