Analysis: State Saves $2.5M From 3K People Keeping Healthy MI Coverage

Originally published by MIRS.

Of the 13,550 people warned they could be moved from Healthy Michigan to a plan on the federal health insurance exchange, 27 percent of them have jumped through the hoop necessary to keep their Healthy Michigan coverage.

If the rest of that original group of people do not complete their health risk assessment (HRA), one analysis has the state paying potentially up to $6.4 million more in costs associated with moving those folks to the commercially-priced health insurance exchange market.

If all 13,550 people from that original cohort had opted against the HRA, that could’ve cost the state $8.9 million if they had all moved over to the federal insurance exchange, meaning at this point the state has staved off $2.5 million it might have had to pay otherwise.

The $6.4 million cost estimate — calculated with help from the Michigan Association of Health Plans’ (MAHP) analysis of health insurance exchange premium prices — is on track with what the Michigan Department of Health and Human Services (DHHS) has already asked for in additional spending this year.

The state requested $6 million for this year to cover what it says is half of the year’s costs in the transition. Of that, $345,000 would come from the General Fund (GF). The Legislature has not yet considered the supplemental request.

However, another 1,451 letters were issued in March to people who have been on Healthy Michigan for at least one year and who had not completed the HRA. And the state expects to send out about 1,500 letters each month, said DHHS spokesperson Lynn Sutfin.

As of March 22, there have been 3,777 people who were contacted in the first group who have done the HRA, meaning they keep their Healthy Michigan coverage.

Due to a variety of factors, it’s going to cost the state more to have this population of Healthy Michigan beneficiaries move over to the marketplace than to just stay on Healthy Michigan (See “Here’s Why Moving People Off Healthy MI Costs The State More,” 3/19/18).

But to figure out how much that could be, MIRS sought out estimates of the average cost of a Healthy Michigan plan, as well as the costs of plans provided on the federal exchange.

Dominick Pallone, executive director of the MAHP, analyzed the non-tobacco prices for health insurance products sold on the individual market exchange, based on a list of plans provided by the Michigan Department of Insurance and Financial Services (DIFS).

From that, the aggregate average of monthly premiums was estimated at $385.25 per month, according to Pallone’s analysis.

In comparison, Pallone said a rough composite estimate of Healthy Michigan is around $330 per member, per month.

From there, the difference between Healthy Michigan and a commercial plan on average would be roughly $55 per month in additional costs for taxpayers, Pallone said.

So that $55 multiplied by 12 months and by the number of people from that original group of people notified — 9,773 people — who have not completed an HRA produces the estimate of $6.4 million.

The state’s match rate for Medicaid is 6 percent, so about $387,010 of those estimated costs would need to come straight from the GF.

But that $6.4 million gross cost estimate is a moving target, given the fact that people may be completing their HRAs and thus able to stay with Healthy Michigan — albeit with more cost-sharing.

That, and a new batch of people newly eligible for the transition to the exchange will be contacted each month by DHHS.

So the number of people who complete their HRAs will impact how much it will cost to transition folks over to the federal exchange.

It’s not clear yet how many people will complete their HRAs. It’s also not clear how many people will eventually become eligible to transition over to the marketplace from Healthy Michigan.

The Healthy Michigan program has more than 687,000 people enrolled in total.