The state of Michigan introduced the Healthy Michigan Plan in 2014, becoming one of 40 states to expand Medicaid coverage. Funded by the Affordable Care Act, this program expanded coverage to include all low-income adults earning up to 138% of the federal poverty level. This year, the University of Michigan published a series of studies evaluating the long-term impact of this expansion, which revealed significant lasting health and financial improvements for enrollees.
The U-M Institute for Healthcare Policy and Innovation partnered with the Michigan Department of Health and Human Services to track the medical and financial outcomes of 575,283 Michigan residents — ages 26 to 62 — who enrolled in HMP during the first four years of the program. In an interview with The Michigan Daily, Nora Becker, an assistant professor of internal medicine who worked on the evaluation, said the expansion primarily benefitted low-income adults without children who had gone uninsured under previous Medicaid coverage.
“The largest group of people who gained coverage under the Healthy Michigan Plan were childless adults,” Becker said. “Before the Medicaid expansion in Michigan, Medicaid was really sort of reserved for children, sometimes their parents, pregnant people and people with disabilities, so healthier adults without children who were very low income essentially had no options for health insurance coverage.”
The evaluation showed a strong association between Medicaid expansion and reductions in medical debt, which decreased by an average of $983 per participant over seven years. Becker said the study differed from past research by revealing long-term accumulated benefits of Medicaid enrollment.
“Earlier research showed short-term reductions in medical debt and collections after enrollment in Medicaid — what was new about this study was we looked much longer after enrollment,” Becker said. “For the people who first enrolled in 2014, we had seven years of post-enrollment data, and what we found, quite strikingly, was that medical debt and collections started to go down, and then just kept declining for people after enrollment.”
The evaluation also included enrollees’ credit report data, and found Medicaid expansion was associated with improved credit scores. Seven years after enrollment, between 30% and 50% of enrollees with subprime credit scores had improved to scores greater than 600.
In an interview with The Daily, John Ayanian, director of the IHPI, said the financial effects of healthcare expansion go beyond healthcare expenses.
“We also found that credit scores improved for those who gained Medicaid coverage, so for people with relatively low incomes, less than 138% to the federal poverty level, which was about $16,000 a year for a single adult when the program began back in 2014,” Ayanian said. “These are very important outcomes because it means if people have less medical debt (and) better credit scores, they’re better able to afford their housing, their food, their transportation.”
About 9% of Michigan residents owe medical debt, contributing to the collective $220 billion in medical debt owed by citizens across the United States. Becker said the new income eligibility threshold still does not cover everyone who cannot afford private insurance, which leads to individuals with similar income levels experiencing vast healthcare discrepancies.
“What these results highlight is that we have an affordability cliff in medical care in this country,” Becker said. “If you are eligible for Medicaid, you get coverage that provides you excellent financial protection from the cost of your medical care. But, if your income is 139% of the federal poverty limit, you are not eligible for that care, and instead you are moved into the world of private insurance, and that is not affordable for those people.”
Becker went on to say she believes healthcare assistance — such as Medicare, Medicaid or private insurance subsidies — should be dramatically expanded in order to cover individuals who do not qualify for Medicaid, but cannot afford private insurance.
“We need much better financial protection from the cost of medical care for people immediately above the Medicaid eligibility threshold — probably up to people at like 400% of the federal poverty limit,” Becker said. “Whether that is through a broader expansion of Medicaid, or an expansion of Medicare, or tax subsidies to help people pay for private plans, we need something to help those people.”
The evaluation showed Medicaid’s expansion not only benefits patients, but also hospitals. Hospital uncompensated care — medical treatment not paid for by a patient or insurer — was reduced by half, drastically reducing costs covered by hospitals. Ayanian said expanded coverage allows patients to seek more frequent care from primary care providers instead of emergency departments, leaving emergency facilities more available for acute care needs.
While researchers found broad health and financial benefits from the expansion, some outcomes were mixed. The evaluation showed non-medical debt and bankruptcy rates remained unchanged even after HMP enrollment. Researchers also raised concerns about HMP’s new payment system. Less than half of HMP enrollees paid the fees they owed, and many did not understand the payment system.
In spite of this, Ayanian said Michigan’s experience has influenced decisions to expand Medicaid in other states.
“Through statewide ballot initiatives, often in Republican-controlled states, voters have decided to expand Medicaid based on some of the early evidence from Michigan and other states that expanded Medicaid in 2014,” Ayanian said. “Those later expanding states saw the health and financial benefits that came to states like Michigan that had chosen to expand Medicaid right from the start.”
Jonathan Palisoc, doctoral candidate in health policy and economics, told The Daily the University’s evaluation of long-term financial benefits could inform policy in the ten states that haven’t expanded Medicaid.
“The states that haven’t expanded, they tend to be the Deep South or a little bit of the Midwest,” Palisoc said. “These are states that, historically speaking, have a pretty high share of low-income individuals and individuals that are much more likely to have medical debt, and so I think it seems pretty clear that an expansion of Medicaid would, at least for those populations, be a net positive on the financial side.”
Palisoc said it is important to observe the impact of Medicaid coverage over a long period of time in order to track its effects on an enrollee’s finances amid other debts and expenses.
“Because people often have debt in other areas … it might take time to see that financial well-being,” Palisoc said. “They’re probably still having to direct it to other debt, and it takes time for that other debt to be alleviated as well. But once they are able to alleviate all of it, you’ll see long-term financial positive effects.”
Despite other factors potentially affecting enrollees’ finances, Becker said that while researchers are confident in the evaluation’s findings, they may not reflect the full financial benefits of Medicaid coverage.
“I’m pretty confident that what we’re picking up is a causal impact of Medicaid expansion,” Becker said. “It is not perfect; however, if we think about if there is some bias or confounding in this analysis … these may actually be underestimates of the financial benefit of enrollment in Medicaid, not overestimates.”
Summer News Editor Niko Wilson can be reached at nikow@umich.edu.
