MI Way Forward or “23 for me!”

A proposal to provide direct assistance to qualifying persons and incentive-based reproductive choices.    An alternative pilot program which requests waiver of the U.S. Medicaid assistance program under Title 42 of US Code, Chapter 7.

For many years now, Michigan and other states have provided Medicaid assistance for a large percentage of live births – generally hovering in the mid 40’s percentage – peaking at 45.3% in 2010.   Finding solutions to reduce the dependence on Medicaid as the insurance of last resort has proven problematic.

MI – Way Forward is a direct-payments assistance incentive program which provides subsidy to qualified individual women who choose to delay family development for a specified number of years.

This pilot program would seek a waiver from federal statutory rules to initiate the opportunity for program participants to receive payment under the plan.    The program seeks waiver for 5000 program participants in first year of implementation.

The goals of this program are quite simple.

1. To encourage young women to delay first pregnancy.    Social science shows that young girls who give birth have greater likelihood to remain in various social welfare programs for a longer period of time.   Increased age and educational attainment provide greater likelihood of successful parenting without social welfare assistance.
2. Reduce long-term expenses to the Medicaid and other Social Welfare Systems.   With an average initial cost exceeding $10k, the expenses to the Medicaid Fund is substantial and crowds out other needs.  Exact long-term costs are difficult to measure, as social service benefits often access multiple programs, with estimates sometimes exceeding $50k lifetime benefits.
3. Equalize behavior-related taxpayer subsidies across socio-economic classes.   Government programs in support of middle and upper-middle quintile persons provide direct, measurable subsidies which are widely accepted as “public good”.    For example, the average payments to Michigan universities (2018) are $5500 per student * (FYES)

* January 2018 House Fiscal Agency Report

The Plan

Qualifying Individuals:   Girls 15 or 16 years old who have themselves been on public assistance* as dependent of one or more resident parents for a period of 5 years or more.

Girls must register with parental or guardian consent before their 16^th or 17^th birthday and participate in a local “Way Forward” support program.

Annual physical examination and physician certification of non-pregnancy filed with the next regular Michigan State Tax Return.

Payment on the following scale as a fully refundable credit.:

While free to begin their families after age 23, in addition to the cash awards…..provide 7 years (through age 30) of Michigan Income Tax Credit (up to $75k in income) — requires residency.

Age 30.  Automatic qualification for MSHDA down payment assistance.   5% to $100k.

Total 7 year cost  (5000 participants)  =  $135 million.  Program costs $15 million (nominal)     50% efficacy =  $55 m.   Estimated 5 year annual cost w/ management = $10.5 – 13 million.

2016 Medicaid Expenses (Estimate) per MDHHS. –  49,884 births @ $8700 / birth –  $434 million.      5 year estimated cost  2.2 Billion

Program cost =  0.6% of current budget      Break even =  1494 / 5000 =  29.8%.       Break even against all social service costs*        260 / 5000  =   5.2%

*Based on estimated $50,000 lifetime costs.

Recommended reading:

Time Magazine:  http://ideas.time.com/2013/03/12/want-to-prevent-teen-pregnancy-pay-teens-not-to-get-pregnant/

The Brookings Institution:  https://www.brookings.edu/opinions/three-simple-rules-poor-teens-should-follow-to-join-the-middle-class/