Granholm Calls on Michigan Congressional Delegation to Oppose Cuts to Medicaid

Contact: Heidi Hansen 517-335-6397

February 24, 2005

Funding, Program Will Dominate NGA Meetings in Nation’s Capital

LANSING – Governor Jennifer M. Granholm is calling on Michigan’s congressional delegation to reject any attempts by the federal government to cut Medicaid funding, saying cuts would make it nearly impossible to provide even the most basic health care for low income seniors, disabled people, children, and pregnant women in Michigan.

"The combination of a dramatic increase in people who cannot afford health insurance and skyrocketing costs of healthcare in general, has created a Medicaid program that is becoming unsustainable for states," Granholm said in a letter dated Wednesday. "Further cost shifts to our state will jeopardize our responsibility to not only provide health care programs for our most frail, vulnerable populations, but also to other programs that serve our public and state."

Granholm, who chairs the Health and Human Services Committee for the National Governor’s Association (NGA), will join her fellow governors in Washington, D.C. beginning Saturday where the issue of Medicaid will be at the forefront of the NGA’s Winter Meeting. Granholm noted that causes of the Medicaid crisis in the states are largely beyond the control of the states and cited the three biggest factors impacting the Medicaid program in Michigan, which garners 25 percent of the state’s general fund revenues. They include:

  • Economic difficulties in Michigan where more and more employers are reducing their health care coverage for employees. The most recent data indicates that about 27 percent of Michigan’s adult Medicaid recipients have a job, and 44 percent of the children on Medicaid have parents that have earned income.

  • The overall growth rate for the entire U.S. health care system, which saw private sector health insurance premiums rise a staggering 12.6 percent last year. Over the last five years, Blue Cross’ cost per person has risen 44 percent, while our state Medicaid’s cost per person has risen only 24 percent.

  • Federal policies. Michigan’s Medicaid program pays for 70 percent of all nursing home care in the state. Most of this population is dually eligible for Medicare and Medicaid. Because Medicare does not have a comprehensive long term care benefit, states have been saddled with paying all of the long term care for the dual eligibles, as well as their Medicare premiums, copays, and prescription drug costs. Approximately 42 percent of all Medicaid expenditures in Michigan are spent on the 180,000 Medicare beneficiaries (dual eligibles).

Michigan and the other states have seen a steady increase in enrollment in the Medicaid program over the past few years. Michigan’s Medicaid caseload has grown 30 percent since October 2001 (continuous growth each month for more than 50 months) and is currently more than 1.4 million individuals (14 percent of the population).

"While our immediate goal is to avoid any cuts, caps, or cost shifts in Medicaid funding for the states, we are ready and willing to discuss meaningful reforms outside of the budget process that will ultimately achieve efficiencies without jeopardizing health care to the vulnerable," Granholm added. "Just as I have expressed a commitment to work with Michigan’s congressional delegation, so, too, is the NGA willing to work with the entire Congress to resolve the critical funding issues surrounding Medicaid."

On Monday, Governor Granholm will huddle with her fellow governors in a closed-door session to discuss findings of the NGA Medicaid workgroup, of which Granholm is a member. On Tuesday, the governors will meet with key congressional leaders, including Michigan Congressman John Dingell, to urge adequate funding for Medicaid and to discuss potential concepts for short and long-term reforms of the Medicaid program.

In addition to Medicaid, the NGA Winter Meeting will be dominated by sessions devoted to education reform. The governors will also meet with President George W. Bush at the White House on Monday.

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