‘Healthy Michigan’ Bill Puts Health Coverage for 670,000 People at Risk

WASHINGTON, June 8 -- The Center on Budget and Policy Priorities issued the following news release:

Michigan lawmakers just passed a bill requiring the state to apply for a federal waiver to take away Medicaid coverage from people who don't meet work requirements and charge Medicaid premiums that total 5 percent of an enrollee's household income. The premiums would apply to enrollees in Healthy Michigan, the state's Medicaid expansion program under the Affordable Care Act (ACA), who have incomes modestly above the poverty line and have been in the program for four years. If Governor Rick Snyder signs the bill, he'll not only take Medicaid coverage away from tens of thousands of Michiganders, he'll also put the entire future of Healthy Michigan in jeopardy.

Up to 54,000 Michiganders would lose Medicaid coverage as a direct result of the bill, the Michigan House Fiscal Agency estimates. And that estimate's likely too low. It assumes everyone eligible for an exemption from work requirements would get one, which is unlikely given the paperwork burdens and confusing requirements, and it doesn't include coverage losses among people subject to higher premiums, as we've explained.

On top of the directly harmful work requirement and premiums, the legislation includes a provision that puts all of Healthy Michigan at risk. If the federal Centers for Medicare & Medicaid Services (CMS) doesn't approve a waiver to allow the premiums or cancels such a waiver in the future, or if the courts invalidate the waiver after its approval, the entire program -- which now covers 670,000 poor and low-income adults -- would end.

Governor Snyder apparently plans to sign the bill, since he issued a statement saying it "ensures the continuation and sustainability of the Healthy Michigan program." That's just not true. The bill's eligibility restrictions would erode Michigan's progress in expanding coverage and access to care and reducing uncompensated care costs. Moreover, CMS could well reject a Michigan waiver proposal or a court could later invalidate it. That would end Healthy Michigan unless Michigan lawmakers quickly amended the law.

Premiums totaling 5 percent of household income are unprecedented in Medicaid, which doesn't allow premiums at all except for people with incomes above 150 percent of the poverty line, and they're substantially higher than what people with similar incomes pay for coverage in the ACA marketplaces in states that haven't expanded Medicaid. CMS has approved Medicaid demonstration projects waiving this rule and letting states charge premiums to people with lower incomes, but never as high as 5 percent.

Under section 1115 of the Social Security Act, a state can implement an "experimental, pilot or demonstration project which, in the judgment of the Secretary [of Health and Human Services, or HHS], is likely to assist in promoting the objectives of [Medicaid]," which are to provide health care to people who couldn't otherwise obtain it. Premiums do the opposite, as research clearly shows. The Kaiser Family Foundation reviewed 65 papers from between 2000 and 2017 on the impact of premiums and cost-sharing in Medicaid and concluded that premiums -- at lower levels than Michigan is proposing -- are a barrier to getting and maintaining Medicaid. In Indiana, for example, 55 percent of those who had to pay a premium never made a first payment or missed a payment while they were enrolled.

In fact, an ongoing court challenge to the waiver that CMS approved for Kentucky, allowing premiums of up to 4 percent of household income, argues that HHS Secretary Alex Azar abused his discretion in approving it because he didn't pay heed to the research showing that premiums would harm large numbers of low-income people.

The outcome of the Kentucky case could change the prospects for a waiver proposal from Michigan. A court ruling that invalidates the Kentucky premiums based on the research showing the harm that premiums cause could put a roadblock in the path of CMS' approval of the Michigan waiver. And even if CMS approved the premiums for Michigan, those premiums could face legal challenges in the future.

Far from putting Healthy Michigan on a more sustainable footing, the legislation now before Governor Snyder creates new risks to coverage for more than half a million Michiganders.