Medicaid is the single largest budget item in our Michigan state budget at $17.5 billion, including $4.3 billion from our General Fund. What if there were an opportunity to save taxpayers 20 percent of this amount while actually providing higher quality services? As it turns out, there is such an opportunity before us.
Statewide, there are 2.4 million Medicaid enrollees, or roughly one in four Michiganders. As part of the Fiscal Year 2017 budget process, I have proposed to launch a pilot study that would enroll 2,400 Medicaid recipients in Direct Primary Care Services (DPCS). DPCS simply eliminates the middlemen (government and private organizations) between a doctor and patient. By reducing overhead and providing real access to preventive care, DPCS has been demonstrated to significantly reduce claims related to catastrophic care, which results in significant overall cost savings.
What is the risk? The success of the pilot is based on a reduction in the number of claims (that is, patients are healthier). If there is no reduction in claims across the pilot population, the state will have spent almost $2 million more than would otherwise have been necessary to care for the enrollees.
What is the benefit? The objective of the pilot is to reduce the number of claims for catastrophic care by 50 percent. If the pilot were to demonstrate a reduction in claims on the order of 35 percent, not only would enrollees have received better health care, but the state will have implemented a proven method of saving taxpayers money while doing so. The potential savings to the state if fully implemented would be $3.4 billion, which includes more than $800 million in general purpose funds. I believe an annual savings of this magnitude coupled with better care is worth the aforementioned risk.
If Michigan were to expand the footprint of DPCS physician practices, we would become “ground zero in a free market revolution in health care,” according to Avik Roy, senior fellow at the Manhattan Institute for Public Policy Research. Michigan employers spend $31 billion annually on health care. Savings of more than $6 billion with better care could be put to use hiring new employees or increasing compensation for existing employees. Local units of government such as schools and municipalities would also be able to stretch taxpayer dollars through health care savings, freeing up more funds for the services residents need most.
The DPCS Medicaid Pilot has been adopted in the Senate version of the Department of Health and Human Services (DHHS) budget. There is a reference to the pilot in the House budget, but its provisions are currently insufficient to ensure the successful execution of the pilot. It is my hope that the consensus version of the DHHS budget will feature the Senate language for this important reason. You can find more information on the differences between the two versions along with the proposed pilot as a whole at www.MorninginMichigan.com.
If you would like to support a golden opportunity for state government to reduce expenses while actually improving the quality of services, please encourage your elected officials to support this pilot project in this year’s state budget. You can find their contact information at legislature.mi.gov.
Sen. Patrick Colbeck represents the 7th Senate District, which encompasses the cities of Livonia, Northville, Plymouth and Wayne, as well as the townships of Canton, Northville and Plymouth.