Senator to Gov. Snyder: Why is Michigan spending so much on Medicaid?

Sept. 27--WASHINGTON -- The chairman of a U.S. Senate committee today urged Gov. Rick Snyder to explain what he called "exponential" increases in Medicaid costs in Michigan and whether the state is taking any actions to try to rein in expenditures.

Questioning costs incurred under the Medicaid expansion program authorized under the Affordable Care Act, U.S. Sen. Ron Johnson, R-Wis., said, "Federal expenditures under this expansion are soaring" in the Healthy Michigan program, which offers Medicaid coverage to people making between 100% and 138% of the federal poverty limit at reduced costs in exchange for them taking on healthy behaviors.

Snyder's office didn't immediately respond to the letter from Johnson.

As Republicans in Congress have moved to repeal and replace the Affordable Care Act, also known as Obamacare, Snyder has touted the success of Healthy Michigan, which currently provides health coverage to 664,375 Michiganders, asking that the state be given the flexibility to protect it and saying it has been cost effective in lowering uncompensated care.

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Johnson, who is chairman of the Senate Committee on Homeland Security and Government Affairs, also was among the sponsors of legislation to repeal and replace the ACA. The measure had been aimed for a vote this week but was turned back after some key Republican defections.

The legislation would have taken federal funding for Medicaid expansion, as well as subsidies used to help pay for individual coverage for people above 138% of the federal poverty limit, and pooled it into block grants for all the states, including those that didn't expand Medicaid under the ACA.

States that did expand Medicaid, including Michigan, were widely expected to lose funding under the plan. Even with that plan shelved for now, however, Johnson and other Republicans could look to other means of curtailing Medicaid spending in the months and years to come.

In the letter to Snyder, Johnson talked about overall increases in federal Medicaid expenditures across the U.S. from $299 billion in 2015 to an estimated $588 billion in 2025. Citing Medicaid expansion as the primary cause, he said "enrollment and expenditures are rising swiftly" in expansion states and that, in Michigan in 2014, costs went from $1.5 billion over the nine months that Healthy Michigan was in place to $3.3 billion in 2015.

He also said per-enrollee costs were surging and asked for data to explain "these rising costs and higher-than-expected enrollment," especially among newly eligible enrollees, as well as what processes Michigan uses to ensure that applications are "accurate" and whether any audits have been done to make sure money isn't being wasted.

Johnson's letter -- which mirrored those sent out to governors in Ohio, California, Hawaii, Illinois, New Hampshire, New York and West Virginia -- was released publicly this morning.

Michigan's Department of Health and Human Services confirmed for the Free Press that federal costs for Healthy Michigan have risen, though not nearly as dramatically as they did in the program's first year. In fiscal 2015, the program cost $3.38 billion in federal funding, which increased to $3.57 billion in fiscal 2016. In the current year, the federal cost is expected to be $3.8 billion, with the state kicking in an additional $117 million.

Per-enrollee costs have gone up as well, from $422.45 per enrollee in the program's first year in fiscal 2014 to $520.76 per enrollee in fiscal 2016. State officials didn't immediately address why those costs have gone up but generally health care costs have been on the increase, in part because of the rising costs of pharmaceuticals.

While enrollment numbers in Healthy Michigan may fluctuate somewhat over the course of a year, the program's enrollment has generally increased since its inception: At the end of September 2015, the program covered just under 600,000 Michiganders compared to about 618,000 people at the end September 2016 and about 664,000 now.

Contact Todd Spangler at 703-854-8947 or at tspangler@freepress.com. Follow him on Twitter at @tsspangler.

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