Health Care Costs in Michigan: Drivers and Policy Options
Report 383 ( May 2013 ) 91 pages
In light of constantly increasing health care costs, policymakers at the state and federal levels are seeking policy options to reduce the burden for families, businesses, and governments. In 2009, Michigan families, businesses, and governments spent $65.9 billion on personal health care services and products, which is more than $6,600 per Michigan resident.
Perhaps even more alarming than the level of health care spending, is the growth rate. While health care spending growth in Michigan is below the national average, it is still higher than the rate of inflation and increasingly growing in its share of the economy. On average, households spend 6.2 percent of their adjusted personal income on health care costs. Businesses spend the equivalent of 10.2 percent of wages and salaries on health care costs. In 2003, health insurance premiums paid by individuals and their employers in Michigan represented 14.6 percent of household income, and by 2011, this figure had risen to 20.0 percent. At the same time that insurance premium prices are rising, employees are covering a larger portion of their health care costs through increased deductibles and other out of pocket expenses. High health care costs are a significant financial risk to the uninsured and even to some covered by health insurance.
CRC's new report, Health Care Costs in Michigan: Drivers and Policy Options outlines the problem with the current level and growth rate of health care spending. The report synthesizes the research on 17 potential cost drivers, and discusses over 20 state policy reform options that may lower the level of spending or cost growth going forward.
Major topics covered in the new CRC report include:
- An overview of the state of health care spending nationally and in Michigan and how it has changed for families, businesses, and governments since 1990.
- Analyses of various health care cost drivers and how they may be adding to Michigan's health spending. These drivers include high prices, opacity of prices, provider payment systems, competition among providers, medical malpractice, and no-fault auto insurance.
- State-level policy reform options for each health care cost driver.
- Pertinent information about how the federal Affordable Care Act may play a role in certain health care cost drivers.
Options for Managing Medicaid Funding and Cost Growth
Report 376 ( February 2012 ) 88 pages
Nearly 1 in every 5 Michigan residents is currently enrolled in Medicaid - a state operated medical insurance program for low income individuals and families that is co-financed by the state and federal governments. Because of the state's nearly decade long recession beginning in Fiscal Year 2002, demand for this program increased, growing enrollment nearly 60 percent. In the current fiscal year, over 15 percent of Michigan's spending from state sources is appropriated to Medicaid, up from less than ten percent a decade ago and despite a nearly 16 percent decline in real total state spending from state sources. As a result, while Medicaid's budget increased 30 percent in inflation adjusted terms, most other state budget areas declined: revenue sharing for local governments (-47.0 percent); higher education (-45.4 percent); community colleges (-25.7 percent); human services (-21.3 percent); K-12 school aid (-21.2 percent); and corrections (-2.3 percent).
Medicaid's growing share of the budget is due in part to the structural imbalance between Medicaid revenues and spending. Medicaid costs are growing at a faster rate than the overall economy, and consequently, the revenue base used to support the program.
The major topics covered in the new CRC report include:
- A look at the structural imbalance between Medicaid revenues and spending, the cost drivers magnifying the problem, and Medicaid's impact on other state budget areas.
- The federal government's role in Medicaid including financing, oversight, and the impact of federal health care reform.
- Finance and spending trends and components.
- Policy options to increase Medicaid revenues and to address expenditure growth in ways that do not directly shift cost or health burdens on to providers or Medicaid beneficiaries.
Memo 1074 ( July 2003 ) 38 pages
Text Only (first 13 pages)
Appendices Only (pages 13 - 38)
Eligibility for Medicaid services is determined by complex formulas that take into account income, assets, age, disability, pregnancy, and other factors. In Michigan, approximately 1.3 million persons are currently eligible for Medicaid.
Income and asset limits for eligibility have not changed since 1996. Even so, the number of eligibles has increased each year since Fiscal Year 2000, largely as the result of unfavorable economic conditions.
It is possible to both increase and decrease the number of persons eligible for Michigan Medicaid by altering income and asset tests, expanding or terminating eligibility groups, or by obtaining waivers from the federal government granting exceptions to eligibility rules. In a budgetary context, however, Michigan data may limit analysis of the fiscal impact of such changes.
Medicaid Eligibility describes the many eligibility categories used in Michigan and the eligibility tests applied to each. It concludes that in the 1990s the major portion of persons eligible for Medicaid shifted from those receiving cash assistance to children and pregnant women.
Medicaid Health Care Services,
Memo 1072, ( March 2003 ) 12 pages
This document seeks to bring greater understanding of the Michigan Medicaid program by describing the range of services provided and the allocation of funding to those services. In this way, it helps to clarify the options available to policy makers.
Medicaid - What It Is and How It Works,
Memo 1071, ( February 2003 ) 4 pages
One of the most difficult budgetary problems facing the new Governor and Legislature is providing for health care insurance for low income persons in the face of a large gap between general fund revenues and expenditures. CRC has begun a new series of analyses of the Michigan Medicaid program.
Proposed New Federal Medicaid Funds for Michigan
CRC Note 2002-01 ( April 2002 ) 2 pages
An analysis of the Governor's plan to implement a health care quality assurance program using funds from Qualified Health Plans and nursing homes to provide a new source of state Medicaid matching monies.
CC 974, State Ballot Proposals - I: Proposal A -- Medicaid Funding, Abortions; Proposal B -- Crime Victims “Bill of Rights” Analyzed the abortion funding and crime victims rights proposals which were on the statewide ballot at the November 1988 general election. ( September 88 ) 4 pages
Misc., Wayne County Proposal #2: Unexpended One-Tenth Mill for Youth Services ( October 92 ) 2 pages
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Last Updated May 21, 2013