A report released today by CHRT, in partnership with University of Michigan economists Thomas Buchmueller and Helen Levy, shows that the State of Michigan could save nearly $1 billion over 10 years while extending comprehensive health insurance to more than 600,000 Michigan citizens if the state expands Medicaid eligibility under the ACA. The U.S. Supreme Court’s June 2012 decision largely upheld the constitutionality of the Patient Protection and Affordable Care Act (ACA), but a provision that would financially penalize states that opted out of the law’s Medicaid expansion was not upheld, leaving the decision to individual states whether or not to expand Medicaid eligibility to individuals at or below 138 percent of the federal poverty level ($31,809 for a family of four).
The State of Michigan has not yet indicated whether it will expand Medicaid eligibility. The CHRT/University of Michigan analysis of three different scenarios, varying mostly according to assumptions about enrollment behavior, shows that under all three scenarios, the expansion would reduce the number of uninsured while reducing overall state spending. In the most likely scenario, by 2020 the state could expect Medicaid enrollment to increase by 619,000 people—most of whom are currently uninsured.
The federal government will bear nearly all of the cost of the expansion, and the new federal funds will offset state spending on existing health programs. Because of this, the state would save an estimated $983 million over 10 years. Under all three scenarios analyzed, the state experienced a net savings over the 10‐year period.