Michigan: The Impact of Medicaid Mandates

Table 2

[The State of Arizona] will continue to press the case that mandates from the federal government have stripped us of our fiscal sovereignty . . . and have stripped the people of their right to representative government at the state level. – Arizona Governor Fife Symington, State of the State Address, January 1993.

We need to get a handle on the Medicaid mandates or else some of us are going to go broke. – Arkansas Governor (now President) Bill Clinton, National Governor's Association, February 3, 1991.

Mr. Clinton's prophetic words speak volumes as to the danger of mandated legislation – particularly in the Medicaid arena where program costs for federal legislation like the 1987 Omnibus Budget Reconciliation Act (OBRA), or the Medicare Catastrophic Health Insurance Act of 1988 are increasing dramatically.

The 1987 Omnibus Budget Reconciliation Act included a nursing home reform section that stipulated the need for states to adjust the requirements by which they evaluate the care offered. They include, but are not limited to, preadmission screening, nurse aide training, and review of mentally retarded residents.

In Table 2, the dramatic increase in the cost of such federally mandated legislation relative to Medicaid is illustrated. From 1990 to 1995 the General Fund/General Purpose (GF/GP) cost of Medicaid mandates to Michigan is expected to increase by over 245 percent (column two) – an average annual rate of increase of 49.1 percent – while Michigan's General Fund revenues will likely grow at their historical rate of five percent or so as inflation averages three percent.