Research & Commentary: Michigan Medicaid Expansion

Published February 19, 2013

As states implement the federal health care law, many are debating whether to expand their Medicaid programs in order to receive a larger federal subsidy. Gov. Rick Snyder recently announced expansion “makes sense for the physical and fiscal health of Michigan,” but state taxpayers may disagree.

If Michigan expands its Medicaid program to individuals at 100 to 138 percent of the federal poverty level, the federal government will provide 100 percent of the additional money for 2014–16, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and beyond. Expansion proponents argue it would be unwise to reject this “free money,” and they say expansion will provide insurance coverage for more Michiganders.

Opponents, however, note expansion will lock in even larger Medicaid costs without improving the quality of care. According to federal government statistics from 2009, more than 21 percent of Michigan’s population already depends on the health care entitlement program, and the Kaiser Family Foundation found expansion would increase enrollment by 30.2 percent by 2019.

In 2010, Michigan spent roughly $11 billion on Medicaid. According to Scott Hagerstrom, Michigan’s state director of Americans for Prosperity, expansion will cost the state an additional $1.6 billion over the next ten years. That would happen because the federal matching rate applies only to newly eligible Medicaid enrollees. Michigan residents who are already eligible but have not enrolled will be forced to do so because of the individual mandate in the federal health care law, and the state will have to bear the cost of those additional enrollees.

Manhattan Institute Senior Fellow Avik Roy notes a report from The University of Virginia found “Medicaid patients were almost twice as likely to die as those with private insurance; their hospital stays were 42% longer, and cost 26% more. Compared to those without health insurance, Medicaid patients were 13% more likely to die, stayed in the hospital for 50% longer, and cost 20% more. It is hard to see how this problem doesn’t get significantly worse when Obamacare’s expansion of Medicaid is fully phased in.”

Instead of expanding a program that already provides inferior health care, Michiganders would be physically and fiscally better off rejecting the “free money” and finding alternative ways to expand health care access.

The following documents offer additional information about Medicaid expansion.

Michigan Medicaid Statistics
The federal government’s Medicaid Web site offers insight into Michigan’s financial contributions to the health care entitlement program.

Michigan: Medicaid and Health Reform
The Kaiser Family Foundation estimates increased enrollment in Michigan’s Medicaid program after expansion.

Michigan: Total Medicaid Spending, FY2010
The Kaiser Family Foundation reveals the cost of Medicaid in Michigan in the year 2010.

AFP-MI Letter of Support: Prohibit Medicaid Expansion Under Obamacare, SB 41
The head of Michigan’s chapter of Americans for Prosperity writes to state senators urging them to avoid Medicaid expansion, highlighting the inevitable consequences for the state. 

Michigan Republican Governor Snyder Backs Medicaid Expansion
Reuters reports Gov. Rick Snyder supports Medicaid expansion in Michigan.

UVa Study: Surgical Patients on Medicaid Are 13% More Likely to Die than Those Without Insurance
Manhattan Institute Senior Fellow Avik Roy writes about a University of Virginia report that finds it is better for your health to be uninsured than a Medicaid beneficiary. 

Research & Commentary: States Should Avoid Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains the Supreme Court ruling on Medicaid expansion. “States should think twice about giving up more control of their Medicaid programs only to further expand a system that is already fiscally unsustainable,” she writes.

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Medicaid: To Expand or Not To Expand
Nicole Kaeding of Americans for Prosperity argues states should avoid expanding their Medicaid programs because doing so would support the flawed and expensive federal health care law, place heavy financial burdens on the state, and expand an already-broken system. 

The End of Federalism: How Obamacare Will Impact States
This brief fact sheet from The Heritage Foundation outlines the consequences of expanding Medicaid programs to meet federal requirements. 

Mario Loyola: Challenging the Constitutionality of Obamacare’s Medicaid Expansion
In a podcast for Coffee & Markets, Mario Loyola describes why he and many other analysts consider the federal health care law’s Medicaid expansion to be unconstitutional.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

If you have any questions about this issue or the Heartland Web site, contact Heartland Institute Government Relations Director John Nothdurft at [email protected] or 312/377-4000.