Medicaid Expansion Looms Large in the Minds of State Legislators

By Evie Zois Sweeney
Muchmore Harrington Smalley & Associates
Senior Lobbyist

March 2013 – The Patient Protection and Affordable Care Act (ACA) has been the elephant in the room, consuming all of the air, attention, and to some extent fear, amongst Michigan legislators for the last 12 months. Thousands of hours have been dedicated to reviewing, evaluating and determining how, or IF the state would implement the myriad of provisions included in the Act. The debate continues to rage within the halls of the Capitol as Michigan legislators contend with the latest controversial provision of the ACA: expanding Medicaid eligibility.

Although most of the ACA was upheld by the Supreme Court last June, expanding Medicaid eligibility from the current 40 percent of the federal poverty limit to 133 percent was a provision ruled unconstitutional by the Supreme Court. Despite that ruling, Governor Rick Snyder included the expansion in his Fiscal Year 2013-2014 budget presented in February, and ever since, Michigan legislators, particularly Republicans, have been left questioning how to tackle the political conundrum.  

The ACA requires increased “shared responsibility” payments to help provide health care costs to those who do not have health insurance. If adopted, the expansion could provide health insurance to an estimated 400,000 additional Michiganders. At the crux of the issue: dollars and cents. The federal government has promised to cover 100 percent of the expense of the expansion for the first three years (if passed, the change would become effective January 1, 2014). However, by 2020, Michigan would be responsible for funding 10 percent of the costs, which has some legislators cautioning warning ahead.  Despite the eventual expense to the state, Governor Snyder believes the state would accrue significant savings by reducing expenditures in state programs currently providing services to this uninsured segment of society. Half of those accrued early savings would be dedicated to a fund that would help defray the costs of the expansion in the later years. The Administration believes the fund would cover expenses until Fiscal Year 2034-35, thus defraying costs for 20 years. As such, the Governor purports the investment is well worth a little legislative indigestion over a politically unpopular federal mandate.

The legislature has yet to act on the expansion and with increasing opposition from conservative and Tea Party interests, the proposal pits the Republican administration against Republican majorities in both the State House and Senate. It’s a political hot potato that has many political observers, small businesses and health advocates anxiously awaiting a decision in the latest controversy surrounding the ACA.