clock menu more-arrow no yes

How Obamacare saved Detroit

The city’s uninsured rate has fallen from 22 percent to 7.4 over the past three years.

A Virgin Mary statute outside the House of Wail Aboaljalo, an asylum applicant from Iraq who relies on Affordable Care Act coverage.
Elaine Cromie for Vox

DETROIT — There are four buildings at the intersection of West Fort and Junction Street in downtown Detroit. Two are boarded up and unoccupied. One is a former brass works factory that hasn’t operated in decades. And one is a bustling two-story health clinic.

The Community Health and Social Services Center, or CHASS, is a buzzing hub of activity in one of Detroit’s poorest neighborhoods. On a hot July morning, its waiting room is full of young children, expectant mothers, and medical staff calling out names for appointments. It is an economic engine delivering health services to the city’s most vulnerable populations, boosted by Obamacare.

Much attention has been given to Trump voters in rural, predominantly white areas of the country that benefited greatly from the Affordable Care Act. Less noticed are the effects the health law has had on urban areas, where health coverage among minority populations has soared.

Nowhere is this more true than Detroit. The city’s uninsured rate has fallen from 22 percent in 2013 to 7.4 percent in 2016, one of the largest declines for any major urban area in the country.

The neighboring buildings by the CHASS health clinic include pawn shops, boarded-up buildings, and a shuttered brass works factory.
Elaine Cromie for Vox
The CHASS health clinic has seen its uninsured rate among patients fall from 86 percent before the Affordable Care Act to 61 percent now.
Elaine Cromie for Vox

CHASS is located in a predominantly Hispanic neighborhood called Mexicantown. Thirty-eight percent of families in the surrounding zip code live below the poverty line. About half of those in poverty work in low-wage jobs such as landscaping and construction.

The nonprofit clinic has spent 40 years serving a low-income, largely Hispanic population. “A lot of people around here can’t tell you what CHASS stands for but, they all know where we are and that we provide care,” says Felix Valbuena, the clinic’s chief executive.

Before the Affordable Care Act, 86 percent of CHASS patients lacked health coverage. That number has since fallen to 61 percent, as approximately 2,800 patients signed up for an expanded Medicaid program under Obamacare. (The clinic still has relatively high uninsured rates due to a significant undocumented population that does not qualify for the health law’s expansion.)

The new Medicaid revenue has allowed Valbuena to go on a hiring spree. CHASS has brought on medical assistants, nurses, and even a dentist over the past few years.

In the Detroit area, the Medicaid expansion brought reliable coverage to people who, prior to the Medicaid expansion, often had to decide whether to pick up their blood pressure medication or pay other bills.

Felix Valbuena, the chief executive of CHASS, still does one OB-GYN rotation each Monday afternoon. Most of the women he sees will have their pregnancies covered by Medicaid.
Elaine Cromie for Vox

“It changed everything,” says May ElHaddad, a 55-year-old hairdresser and Lebanese immigrant. She is enrolled on the Medicaid expansion and is currently receiving treatment for breast cancer. “I don't imagine my life now without Medicaid. Without insurance, it’s not okay to live.”

Medicaid covers four out of every 10 residents of Wayne County, where Detroit is. And one out of 10 are covered by the Affordable Care Act’s expansion of the program to low-income, able-bodied Americans, a common population in the Detroit metro area.

“Kentucky became the poster child for the Affordable Care Act, but Detroit could serve that role just as well,” says Paul Hughes-Cromwick, an analyst at the Altarum Institute, a health policy nonprofit based in Ann Arbor that has studied the health law in Michigan.

Those signing up for coverage tend to be African American, Latino, and Arab American, minority groups that experienced especially high uninsured rates in Detroit and nationwide before the health law took effect.

The House has passed an Obamacare repeal bill that would end the Medicaid expansion and make billions of dollars of cuts to the rest of the program. The Senate is expected to vote on beginning debate on a similar bill later Tuesday. This would hit a city like Detroit, still digging out of the recession, especially hard.

“We would immediately lose coverage for hundreds of thousands of people,” says Laura Appel, a senior vice president with the Michigan Hospital Association, whose group has seen a 50 percent decline in the uninsured showing up to their facilities. “We try to point that out every moment we can.”

In places like Kentucky, Obamacare enrollment is concentrated in rural, predominantly white areas. In Michigan, the opposite is true. It is the densely populated and diverse Detroit area that has the most sign-ups.

Much of Detroit’s Affordable Care Act enrollment has been among minority populations, including the growing Arab-American immigrant population.
Elaine Cromie for Vox

Fourteen percent of Michigan’s Medicaid expansion enrollees live in Detroit — even though the city is only home to 7 percent of the state’s population.

Obamacare has become an integral part of the city’s economy. Its voters turned out heavily for the candidate who promised to keep it in place.

“The current enrollment is beyond all of our expectations”

Detroit’s population peaked at 1.9 million in 1950, an era when large automobile companies powered a thriving economy. The city’s population held relatively steady up through the late 20th century, although it became more diverse. The Mexicantown area, for example, began to attract immigrants from the Jalisco province of Mexico as early as the 1970s.

But when the Great Recession hit in the late 2000s, it hit Detroit especially hard. A city built for 2 million, already thinned by white flight, saw its population dwindle to 700,000. While the population has since stabilized, large chunks of the city remain unoccupied. In the area that surrounds CHASS, there are dozens of blocks full of shuttered houses and empty lots grown over with small purple wildflowers.

The Mexicantown neighborhood of Detroit has attracted immigrants since the 1970s, but it still has many unoccupied buildings as Detroit’s population has shrunk.
Elaine Cromie for Vox

What didn’t disappear, however, was Detroit’s robust health care system, which has long boasted some of the country’s top hospitals. The United Auto Workers was accustomed to negotiating Cadillac health benefits for its members, leading to a high concentration of hospitals and doctors. One of the city’s largest health systems shares a name with a major auto company: the Henry Ford Health Care System.

Even in the depths of the recession, Detroit still remained home to top-ranked medical facilities. “The city has not always been the most distressed city in the country,” says Marianne Udow-Phillips, executive director of University of Michigan’s Center for Health Care Transformation. “Historically, Michigan has had higher rates of insurance coverage as a result of the UAW negotiating health benefits. They’ve built up an infrastructure to provide significant medical care.”

This made Detroit something of an anomaly in the mid-2010s, when the Affordable Care Act began. It was a city replete with hospitals and doctors’ offices but with a dwindling number of patients to serve. In other words: The large base of employer-sponsored coverage was gone, but the health infrastructure built on top of it remained.

Jobs did start coming back to Michigan in 2010. The unemployed rate ticked down year after year. But these jobs didn’t pay nearly as much as those from the pre-recession era. The state’s poverty rate has remained stubbornly high.

“People were going back to work, but they were going back to significantly different jobs,” says Appel, with the hospital association, who shared this data. “They’re not getting out of poverty. You can see the poverty line on the chart just stays high even as unemployment keeps dropping.”

A city with a large low-income population and robust health infrastructure was, in many ways, the ideal target for the Affordable Care Act. Doctors were ready to absorb new patients — and Detroit residents were in need of health coverage.

Michigan’s Medicaid expansion began in April 2014. The state set a goal of signing up 323,000 people for the program during the first year. It hit that goal within just two months.

By the end of the year, 477,000 Michiganders had signed up for coverage. The most recent data from this month estimates that 671,000 people currently rely on the program for coverage — including 156,000 in Wayne County alone.

“I thought it would be about 400,000,” Appel says. “Others thought it would be 525,00, and I thought they were nuts. The current enrollment is beyond all of our expectations. But you look at that chart and then you understand why.”

Minorities, not whites, have seen biggest coverage gains under Obamacare

It is true that the states won by President Trump had the highest Obamacare enrollment. Places like Kentucky and West Virginia have seen double-digit declines in their uninsured rates over the past five years. Their voters overwhelmingly supported Trump, who promised to repeal the Affordable Care Act while offering few details on what would replace it.

It is also true that the minority groups — demographics that largely did not support Trump — have seen the biggest uninsured rate declines under the health law. Minority populations have typically lacked coverage at a rate higher than the general population, meaning they were among the biggest beneficiaries of the health law’s expansion of coverage.

The uninsured rate among white Americans has fallen by 4.4 percentage points under the Affordable Care Act. But it has declined 7.7 percentage points among African Americans and 9.5 percentage points among Hispanic Americans.

Obamacare enrollees and experts studying the expansion describe the Affordable Care Act’s coverage expansion as a lifeline in Detroit, a city where well-paying jobs with health benefits are increasingly hard to come by — in some cases, a substitute for the comprehensive employer-sponsored plans that were pervasive when the auto industry was strong.

Within the first year of Medicaid expansion, the Michigan hospitals saw a 50 percent decline in patients turning up at hospitals without coverage. The amount of uncompensated care provided by hospitals fell from $424 million in 2013 to $282 in 2014.

“The city was in bankruptcy, and [so were] some hospitals and community health centers,” says John Ayanian, director of the Institute for Healthcare Policy and Innovation at the University of Michigan. “Having those extra federal funds as Detroit and the state were coming out of the recession has been a clear plus for the local economy and the employment prospects of the city.”

Ayanian has led a state-funded study of the Michigan expansion. The government charged him with evaluating how the new coverage program affected the state, whether it was worth the money Michigan spent on it.

His research has found that the Medicaid expansion has created 30,000 new jobs in the state. Many are in the Detroit area, and, perhaps unsurprisingly, two-thirds are completely outside the health care sector.

Other research from his team helps this makes sense: He found that prior to Medicaid expansion, that population paid an average of $500 out of pocket on health-related costs. Freeing up that money to go to other costs appears to have made it easier for low-income Michiganders to enter the labor force. It’s easier to search for a job, for example, when you have the extra money to spend on bus fare or making copies of a résumé.

One major survey of more than 4,000 Michigan Medicaid expansion enrollees found that 69 percent of those employed said they felt they did better work now that they had coverage — and 55 percent of the unemployed believed Medicaid coverage made it easier to look for a job.

“That $500 that was being spent on health care can now be used to pay for food, rent, or transportation,” Ayanian says. That all makes it easier for a low-income population to search for jobs, some inside the health care industry but even more in other fields like hospitality or construction.

You understand this a bit better when you meet a patient like Orelia Garcia De Soto, a 56-year-old Mexican immigrant who gets her care at CHASS. De Soto immigrated to the United States in 2002 and became a citizen five years later.

Orelia Garcia De Soto used to skip her medications when they cost too much before the Medicaid expansion.
Elaine Cromie for Vox

De Soto works as a hotel housekeeper in suburban Detroit, a job that doesn’t offer health benefits (she also sells homemade tamales on the street to bring in extra income). She went years without health insurance before signing up for the Medicaid expansion in 2014.

De Soto says she was able to get by before the Medicaid expansion since CHASS provides care to uninsured, low-income patients on a sliding fee scale. But not having insurance meant sometimes going without. She would skip her heart disease or pre-diabetes medications when she didn’t have the $7 for the copayment.

“It was a bit harder,” De Soto told me through a Spanish translator.

Under the Medicaid expansion, De Soto pays nothing for her prescriptions. She came in for her regular physical this July, and a nurse complimented her on her pre-diabetes control.

De Soto complained about tingling in her fingers, which the nurse thought could be a symptom of carpal tunnel syndrome (possibly the result of her repeating the same motions day after day in her housekeeping job). The nurse planned to fit her for braces to keep the condition under control and explain why the tingling was happening in the first place.

Medicaid expansion undeniably makes it easier for De Soto to hold down her job. The same was true for her husband, who works as a chef and was able to get a benign tumor removed from his neck after the Medicaid expansion began. When I ask what would happen if the Medicaid expansion went away, she throws up her hands a bit.

“It would be bad,” she says. “Very bad.”

De Soto has come to rely on the Medicaid expansion for her health coverage. She went uninsured for years because her job as a hotel housekeeper did not provide coverage.
Elaine Cromie for Vox

The Senate and House plans to repeal and replace the Affordable Care Act would eliminate the Medicaid expansion in 2020. Michigan has made clear it would not fund the program itself but rather would end it as soon as the federal funding declined.

De Soto would qualify to purchase a plan on the private market and get tax credits to do so. But those tax credits would help buy a plan with a $6,000 deductible — and she doesn’t have $6,000 to spare. The Congressional Budget Office has estimated that low-income Americans like De Soto would look at this option and decide to once again go without coverage.

“The deductible for a plan with an actuarial value of 58 percent would be a significantly higher percentage of income,” the nonpartisan office concluded in a report last month. “As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan.”

De Soto knows how to get by without health insurance; she did it for years before the Affordable Care Act. But getting by means paying more money or going without. It means another obstacle to holding down a job. It means managing medical bills along with rent and electricity and grocery bills too. It means a lot — to her, and to her city.