Veto Shocks HMO Plan Backers

January 7, 2005
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LANSING — Backers of legislation to give HMOs greater flexibility to craft lower-cost policies plan to mount another push in 2005, after a previous bill died when Gov. Jennifer Granholm refused to act on it late last month.

Granholm, citing concerns about cost shifting and partisanship, opted to neither sign nor veto the bill sponsored by state Sen. Bill Hardiman, R-Kentwood. Instead the governor took no action, exercising a pocket veto to allow the bill to die without explanation after the Legislature had adjourned.

Most disappointing to backers of the bill is that they had negotiated the final version with the administration after initial opposition from the state Office of Financial and Insurance Services.

Hardiman plans to re-introduce the legislation again during the new legislative session and hopes to work out differences with Granholm. He calls the bill "one option" to consider in addressing the high cost of health coverage.

"I want to propose it again to at least keep the debate going," Hardiman said. "This is one option and it's not an end all, but I certainly think it's a worthy option and I think she needs to speak to it and say, 'Yes, I will support this' or 'This is why I don't support it.'"

Hardiman's legislation was designed to allow HMOs to bring to market lower-cost options that may enable employers who are considering dropping employee health coverage to maintain some form of benefits. The thinking is that some health coverage is better than no health coverage.

When first proposed in May, the bill sought to ease regulations that mandate what benefits HMOs must provide in a health plan. The goal was to give HMOs flexibility to tailor a benefit package to exactly what an employer wants and needs in today's era of escalating health premiums and, more importantly, at a price they can afford.

Amid opposition from OFIS, the bill was re-written in a way that maintained benefit mandates but gave HMOs much of the flexibility they sought to write the kind of policies now in demand in the marketplace, where employers are shifting more of the cost burden for health benefits to employees through higher co-pays, deductibles and shared premiums.

Granholm did not like the bill because it would promote further cost shifting, spokeswoman Liz Boyd said.

"The governor found no compelling reason to sign that legislation," Boyd said. "Pushing costs onto consumers is really at odds with the concepts of what HMOs are all about."

Granholm also was concerned about the highly partisan passage of the bill, Boyd said. The bill passed the state House and Senate largely along party lines and drew strong opposition from labor unions.

"It was passed on a very partisan basis and certainly the governor was interested in signing legislation that is bipartisan," Boyd said.

Granholm's decision not to act on the bill and let it die surprised those who had worked on the issue during 2004.

Rick Murdock, executive director of the Michigan Association of Health Plans, hopes the coalition that formed to push the bill through the Legislature can reconcile differences with the governor during 2005.

"We still believe that the administration is serious about doing everything possible about the cost of doing business in the state of Michigan, and the cost of heath care is part of the burden," Murdock said.

The Association of Health Plans represents 27 health plans in Michigan that cover 2.2 million people employed at 29,000 businesses.

As passed in both the House and Senate, the bill would have given HMOs the same flexibility to tailor health plans that commercial insurance carriers now have, Murdock said.

"All we were looking for was to level that playing field," he said. "It created tools for our members to price their products more competitively."    

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