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Michigan Republicans rethink Medicaid expansion

By Eric Whitney | January 21, 2014

Henry Ford Hospital in Detroit.

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Nationally, Republican party leaders say their number one campaign issue for the midterm elections is opposition to Obamacare.

But at the same time, a growing number of Republican states are now embracing a major provision of the law — expanding Medicaid, the government-funded health benefit program for the poor.

The Supreme Court made doing that optional for states and most Republican-led states have said "no," including Kansas and Missouri. But now, some states like Ohio, Iowa and Michigan are forging compromises with the White House on Medicaid.

Nancy Schlichting, CEO of Henry Ford Hospital in Detroit.

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Michigan changing course

To understand why this happened in Michigan, drop in on the cavernous, busy emergency room at Henry Ford Hospital in the heart of Detroit. About 1 in 3 patients being treated by the blue-scrubbed swarm of doctors, nurses and techs is uninsured. It's a much higher rate than in Michigan or the rest of the country, and that means hospitals like this one had been providing a lot of health care for free.

Henry Ford Hospital chief executive Nancy Schlichting says even as Detroit lost nearly a quarter of its population in the last decade, the amount of care the institution provides for free increased.

"About seven or eight years ago we were at about $100 million a year. We're now at $240 million a year in uncompensated care," she says.

So when the Affordable Care Act offered Michigan the chance to give Medicaid benefits to some 400,000 more residents, Schlichting lobbied hard for the state to say "yes."

"We were very active in advocacy," she says. "We got all of our employees engaged. We had over 5,000 emails that went to state legislators, as they were debating the Medicaid expansion for the state of Michigan. We almost shamed people into it, you know, 'How can you turn your back on the people of this state, who have lost jobs?"

Michigan state Rep. Al Pscholka

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A Republican challenge from a Tea Partier

But Republicans initially saw themselves as turning their backs on Obamacare, not the people of Michigan.

State Rep. Al Pscholka was one of them.

Pscholka's district, on the southeast shore of Lake Michigan, is a solidly Republican area so Obamacare doesn't have a lot of fans there, he says: "When people say Medicaid expansion, I think to a lot of us that meant bigger government, and it meant expanding a program that doesn't work very well."

Pscholka is a Republican party leader in the Michigan House. He was asked to look at ways to reform Medicaid. But then Republican governor, Rick Snyder, came out in favor of Medicaid expansion last year. Snyder argued that if the state didn't expand, the millions of dollars in Affordable Care Act taxes and fees Michigan would be paying would just go to other states, and not come back home in the form of new payments to hospitals and doctors.

Furthermore, Pscholka says when he took a hard look at Medicaid, he didn't find the broken, bloated government program he was expecting.

Efforts continue to expand Medicaid in Kansas and Missouri

"When I understood how it worked, and what we had done in Michigan in the late '90s, that was actually pretty smart, we've privatized a lot of that already, which I think a lot of folks didn't understand," says Pscholka.

Medicaid is a government-funded program, but Michigan long ago started contracting with private sector HMOs to administer it. The idea was to use private market incentives to increase efficiency. Pscholka says that makes it easier for conservatives to stomach, and he helped draft legislation to accept federal Medicaid expansion dollars, but with some conditions.

The bill passed by one vote in the state Senate.

"This is not an easy thing to explain." Pscholka says. "It's not an easy thing to get up at my county GOP meeting, and look at friends of mine, who've been friends of mine for 20 years, who are now shooting darts at me with their eyes, and can't believe that I was even involved in this. Not only that I voted for it, but that I was somehow involved in crafting this legislation."

Pscholka's change of heart on Medicaid earned him a primary challenge from Tea Party candidate Cindy Duran. But she's a longshot to beat him, and those favoring expansion have some strong allies beyond Michigan's popular governor. Hospitals, doctors and the state's small business association all rallied behind the idea.

Medicaid coverage, with a caveat?

Cynthia Kay, who owns a video production company with eight employees in Grand Rapids, hopes putting more people on Medicaid will help keep the price of her company's health insurance plan down in the future.

"If you think about it, we're paying for the cost of health care anyway," Kay says. "Uncompensated cost of care is driving my premiums up every single year. So, whether I think I'm paying for it or not, I'm paying for all the people who are using the emergency room as their primary care physician."

Advocates for the poor are thrilled so many uninsured Michigan residents will now be able to get Medicaid, but they worry about some significant details that have yet to be finalized.

Among the compromises the White House made to win Republican support in Michigan are requirements for some Medicaid recipients to pay for at least part of their care, according to Jan Hudson, a senior policy analyst at the Michigan League for Public Policy, which advocates for low income people. That could include co-pays for physician office visits and procedures.

"Cost sharing is always a concern for low-income people. The research says that that can be a barrier to people receiving the care that they need," Hudson says.

Still, the White House is approving cost-sharing in Iowa and Arkansas. Iowa recipients will pay extra if they overuse emergency rooms, and Michigan will charge them more if they don't stick with wellness plans designed to keep them healthy.

Groups that favor Medicaid expansion nationwide point to those kinds of requirements as evidence that the White House is willing to compromise, and hope that will entice the 23 states that are still resisting expansion to take another look and work out special arrangements of their own.

This story is part of a partnership with NPR and Kaiser Health News with support from the Dennis A. Hunt Fund for Health Journalism, a program of the USC Annenberg School of Journalism's California Endowment Health Journalism Fellowships.

KHI News Service coverage of Medicaid expansion

Medicaid Access Coalition launches online "ticker" showing foregone federal dollars (2/13/14)
→ KHI report: Nearly 182,000 Kansans in the ‘Eligibility Gap’ (1/11/14)
House speaker says Medicaid expansion is "up to the governor" (1/10/14)
KS Senate president says Medicaid expansion unlikely to gain approval this session (1/7/14)
Profiles of the coverage gap: Kathleen Christian (1/6/14)
Efforts continue to expand Medicaid in Kansas and Missouri (1/6/14)
Hospital association hires former Bush HHS secretary to help craft a plan Kansas Republicans might support (12/23/13)
Iowa wins approval to expand Medicaid by using federal funds to buy private insurance (12/11/13)
White House officials hold call to urge Medicaid expansion in Kansas (11/21/13)
Republican governor talks up plan to expand Medicaid — his way (10/28/13)
Challenger says Brownback owes voters a decision on Medicaid expansion (10/22/13)
Nearly 5.2M Americans fall in coverage gap in states not expanding Medicaid (10/16/13)
Sebelius: Feds flexible on how states expand Medicaid (9/22/13)
Sebelius says Kansas and Missouri are missing the boat on Medicaid expansion (9/20/13)
Medicaid expansion coalition finds strength in numbers (9/17/13)
Republican Gov. Corbett proposes expanding Pennsylvania Medicaid (9/16/13)
Kansas lawmakers urged to consider Medicaid expansion by Wesley CEO (8/29/13)
Estimating maneuver could help more people gain from Obamacare: How the poor might qualify for Affordable Care Act subsidies in states that don't expand Medicaid (8/12/13)
Report: States not expanding Medicaid stand to benefit most from doing so (7/18/13)
CMS won’t penalize hospitals in states slow to expand Medicaid (5/14/13)
Insurer Centene: We can do Arkansas-style Medicaid (5/14/13)
The Arkansas Medicaid Model: What you need to know about the 'private option' (5/2/13)
Nothing to be done about coverage gap in states not expanding Medicaid, feds say (4/29/13)
Brownback says he's listening to Medicaid expansion proponents, opponents (4/5/13)
Oregon shows costs of putting Medicaid enrollees in private coverage (3/29/13)
Governor urged to expand Medicaid eligibility (3/27/13)
Arkansas Medicaid expansion attracts other states' interest (3/26/13)
Senate president prefers options remain open on Medicaid expansion (3/25/13)
States urged to expand Medicaid with private insurance (3/22/13)
Senate budget amendment underscores opposition to Medicaid expansion (3/21/13)
Study: Kansas employers face millions a year in possible penalties without Medicaid expansion (3/15/13)
More than 30 Kansas groups pushing for Medicaid expansion (3/12/13)
Health insurers see big opportunities in health law’s Medicaid expansion (3/8/13)
Medicaid expansion supporters to step up lobbying efforts (3/7/13)
Budget committee hears resolution opposing Medicaid expansion (2/22/13)
Legislators focusing on Medicaid expansion cost estimates (2/19/13)
Kansas hospital group study predicts expanding Medicaid would generate 4,000 jobs (2/18/13)
Brownback officials release their cost projections for Medicaid expansion (2/8/13)
Medicaid expansion bill introduced (1/22/13)
Kansas hospitals worried about loss of dollars for charity care (1/14/13)
Brownback compiling own estimate of Medicaid expansion cost (12/20/12)
Group urges Brownback to expand Medicaid eligibility (11/9/12)
Debate begins on possible Kansas Medicaid expansion (10/25/12)
Amerigroup CEO says states ‘need’ to go along with Medicaid expansion (7/11/12)
Kansas hospitals ready to get on with federal health reform, spokesman says (7/2/12)
Kansas AG claims partial victory in health reform case (6/29/12)
High court upholds Affordable Care Act, but ruling puts limits on Medicaid expansion (6/28/12)

→ Kansas Hospital Association: An opportunity for the Kansas Medicaid program
→ Americans for Prosperity-Kansas: Well-intentioned policies do more harm than good
→ Health Reform Resource Project: The cost of not expanding Medicaid
→ Rep. Jim Ward: Medicaid expansion essential for healthier Kansas
→ Rep. David Crum: Reasons for opposing Medicaid expansion
→ National Academy for State Health Policy: Much ado about Arkansas: Medicaid in the insurance exchange

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