Economic Effects of Medicaid Expansion in Michigan Interview with:

John Z. Ayanian, MD, MPP</strong> Director of the Institute for Healthcare Policy and Innovation and Alice Hamilton Professor of Medicine University of Michigan

Dr. John Z. Ayanian

John Z. Ayanian, MD, MPP
Director of the Institute for Healthcare Policy and Innovation and
Alice Hamilton Professor of Medicine
University of Michigan What is the background for this study? What are the main findings?

Response: Our study assessed the broad economic impact of Medicaid expansion in Michigan – one of several Republican-led states that have chosen to expand Medicaid under the Affordable Care Act. About 600,000 low-income adults in Michigan are covered through the program, known as the Healthy Michigan Plan, which began in April 2014.

Using an economic modeling tool that is also used to advise the state government for fiscal planning, we found that federal funding for the Healthy Michigan Plan is associated with over 30,000 additional jobs, about $2.3 billion in increased personal income in Michigan, and about $150 million in additional state tax revenue annually. One third of the new jobs are in health care, and 85 percent are in the private sector. The state is also saving $235 million annually that it would have spent on other safety net programs if Medicaid had not been expanded.

Thus, the total economic impact of the Healthy Michigan Plan is generating more than enough funds for the state budget to cover the state’s cost of the program from 2017 through 2021. Beginning in 2017, states are required to cover 5 percent of the costs of care for Medicaid expansion enrollees, and the state share of these costs will rise to 10 percent in 2020. The remaining costs are covered by federal funding. What should readers take away from your report?

Response: The economic impact of Medicaid expansion extends well beyond health care providers and the wallets of those who formerly had no insurance.

We hope that our findings will provide useful evidence to Michigan lawmakers as they consider the future of the Healthy Michigan Plan, as well as informing decisions about Medicaid expansion in other states. Nineteen states have not expanded Medicaid under the ACA provision that allows coverage of all adults with annual incomes up to 138 percent of the federal poverty level (about $16,400 for a single adult). What recommendations do you have for future research as a result of this study?

Response: For the state and federal government, our University of Michigan team is conducting a formal evaluation of other aspects of the Healthy Michigan Plan, including its impact on Michigan residents enrolled in the program and on the health care providers and hospitals serving them.

As the future of the Affordable Care Act is debated in Washington, DC and state capitals and proposals to replace some of its components are introduced, further research can compare the health and economic outcomes in Medicaid expansion states and non-expansion states. Is there anything else you would like to add?

Response: Our current study was funded by the Commonwealth Fund, which was not directly involved in conducting the study. The broader evaluation of the Healthy Michigan Plan that my colleagues and I are conducting is funded by a contract from the Michigan Department of Health and Human Services. This broader evaluation is required under the federal waiver that allowed Michigan to customize its Medicaid expansion program for adults in the state. Thank you for your contribution to the community.


Economic Effects of Medicaid Expansion in Michigan
John Z. Ayanian, M.D., M.P.P., Gabriel M. Ehrlich, Ph.D., Donald R. Grimes, M.A., and Helen Levy, Ph.D.
January 4, 2017DOI: 10.1056/NEJMp161398

Note: Content is Not intended as medical advice. Please consult your health care provider regarding your specific medical condition and questions.

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Last Updated on January 8, 2017 by Marie Benz MD FAAD