Legislators Mull Michigan First

June 30, 2006
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LANSING — Though nearly everyone seems to support the concept of providing health care insurance coverage for the state’s uninsured, some question Gov. Jennifer Granholm’s proposed Michigan First Health Care Plan and others are asking for fuller detail on the plan. Below are comments the Business Journal solicited from legislators on both sides of the aisle.

State Sen. Ken Sikkema, R-Wyoming

Ari Adler, deputy chief of staff and press secretary for Sikkema, said the senator has a number of reservations about the governor’s health plan. “It is not believable that we can provide health insurance for a million more people and not have it cost the state any more money,” Adler said.

As Sikkema sees it, the problem with the plan is that it’s sketchy at best; the governor doesn’t even know what the actual program will look like.

“Since the governor attempts to alienate our state from President Bush every chance she gets with political demagoguery, it’s doubtful the federal government would bend over backward to help Michigan with an experimental plan,” Adler commented.

Adler said that while Sikkema supports the idea of providing more health care, he is a realist and understands that it would only come at a significant cost that must be paid for somehow. 

“No one has been able to tell us how much the governor’s plan will cost and how she will pay for it,” he concluded.

State Sen. Mark Schauer, D-Battle Creek

Schauer said that reducing the burden of health care costs to Michigan residents is crucial to turning around the state’s economy and creating jobs.

“The governor’s Michigan First Health Care Plan is an innovative, cost-effective plan to do just that,” Schauer said. “By providing health care for people, specifically the working poor, who do not have access to either traditional insurance or Medicaid, it will save both plan participants and taxpayers in the long run.”

Schauer said the plan is “certainly viable.”

“Over one million Michigan residents do not have health care coverage, and the simple fact is that businesses and covered individuals pay more as a result — to the tune of $700 per family per year. The governor’s plan would cover about half of these individuals, reducing this burden significantly by decreasing uncompensated care and insurance premiums and increasing access to less-expensive preventive care.”

State Sen. Tom George, R-Kalamazoo

George believes the governor’s funding proposal for Michigan First is unclear. He said his understanding of the waiver process is that the federal government may grant a state a waiver for use of federal Medicaid funds if the state is going to make a change that’s going to save the federal government money in the future.

“With the governor’s plan to expand coverage, I don’t see how you can show that’s going to save money,” George said. “If you’re covering more people, you’re going to spend more money, so I don’t think the argument works for getting a federal infusion of dollars.”

The plan also lacks a provision to prevent adverse selection, he said: “Adverse selection is when we offer insurance coverage to a bunch of uninsured people, and most of them are healthy and don’t see a need for it, so you only get people who are sick signing up.”  

George said the fact that the state saved the federal government Medicaid dollars in the past is another way of saying that the state’s Medicaid payments to hospitals and providers have been too low. In his estimation, if the state is going to change Medicaid, it should be restructured to reward people for healthy behavior.

“I don’t think the plan makes Michigan healthier if it’s just paying for services. I don’t see how just expanding Medicaid without putting in incentives for healthy behavior makes us any healthier in the long run.”

George is the primary sponsor of SB 1255, which has passed the Senate and is sitting on the House calendar. Among other things, the bill would permit the state to use Medicaid funds to create an incentive program that would modify program benefits or cost-sharing for recipients who practice healthy behavior, and would permit the Department of Community Health to create a pay-for-performance incentive program for HMOs. 

State Sen. Gretchen Whitmer, D-East Lansing

“Roughly a million people in Michigan are uninsured, and Governor Granholm is taking affirmative steps to change this situation,” Whitmer said. “Hopefully, the Bush Administration will put policy over politics and look favorably on Michigan’s proposal.”

Rep. Dave Hildenbrand, R-Lowell

“Philosophically, I think most of us in the Legislature would like to see more people covered by health care insurance,” Hildenbrand said.

He said the challenge is that with a $1 billion price tag on the proposed health care plan, how will the state pay for it? As he sees it, the governor has talked about leveraging some federal dollars, but that effort hasn’t panned out yet.

“The balance of the cost would come from the state, but I don’t know how we would come up with the $400 million or $500 million in additional revenue to fund this without raising taxes, and I wouldn’t feel comfortable going back to the taxpayers to ask for additional revenue to qualify more people for state-run health care.”

Given the more than $1 billion cost of the plan, Hildenbrand doesn’t see it moving from concept to reality. He also thinks it’s “far fetched” to think the plan could be implemented as early as next spring.

He said it would be great to have all Michigan residents covered by health care insurance, but he just can’t support a state-run health care system until the state gets its business structure in place. Once that’s in place and the economy is thriving, a large part of the problem will take care of itself, he said. 

“That’s sort of the model that we want to work towards: Get our unemployment rate down, get a business tax structure and a regulatory structure that business can do well in, and then Michigan businesses will provide the necessary health care coverage for their employees.” 

Rep. Michael Sak, D-Grand Rapids

Sak said he is “absolutely supportive” of the governor’s health care insurance plan and hopes the state can secure the $600 million waiver in Medicaid funds from the federal government to put the plan into action. He pointed out that the $400 million in state revenues that would also go toward funding the plan is money that’s already used to cover the uninsured in Michigan, so there would be no general fund/general purpose dollars involved.

“I think, first thing, that everyone in Michigan deserves health care coverage. There has been discussion and commentary that this will also lower the cost for everyone in the state of Michigan,” Sak said, noting that the health care expenses of the state’s uninsured costs residents more than $700 a year (for a family policy).

He suggested that under the Michigan First plan, people who were formerly uninsured would be more inclined to make appointments with primary care physicians instead of using hospital emergency rooms for primary care services — a practice that drives up health care costs for everyone. With greater access to primary care, the focus would turn to preventive care, he said.

“If we can get that Medicaid waiver, I think it will be good for all citizens of Michigan.”

Rep. Jerry Kooiman, R-Grand Rapids

Kooiman said he agrees with the impetus behind the plan because health care is an important issue for employers in Michigan, but said there are far too few details on how the Michigan First program would operate, who would participate and how it would be financed. Until he and his colleagues have more details, he said, they’re a little bit hesitant to say whether or not they like the plan.

“My position is that the devil is always in the details,” Kooiman said. “We have current fiscal issues with our Medicaid program; it’s a huge part of our budget and growing at an unrestrained rate. If we buy into this proposal, what happens if employers drop their employer-sponsored coverage so that their employees are eligible for this program? Do we end up taking up a whole bunch more individuals than the governor originally proposed?”

Kooiman asked: What happens if the federal government closes the waiver a few years down road? Does the state simply discontinue the program, leaving a lot of individuals without health care again, or does it become a burden to tax payers through the state’s general fund dollars? 

“Is changing our tax policy the better route to encourage employers to provide employee health benefits by tax credit, as opposed to the current single business tax law that increases their tax liability if they do provide health care benefits?” he said. “I’ve always said that we ought to create incentives for employers to provide employee health care coverage. Which is the better approach: Create a government program or provide the incentives for businesses that already provide the majority of health care coverage in Michigan?”     

Rep. Doug Bennett, D-Muskegon

Bennett thinks Granholm is trying to do something that really needs to be done. Massachusetts has implemented a similar plan, he pointed out, and he believes Granholm’s plan is doable, as well. From his perspective, the plan looks like it will save residents money rather than cost them money.

“The people who don’t have insurance now don’t go to a doctor anywhere until they have a medical emergency. Then they go to the emergency room and by that time you’re into a big medical cost — not just the emergency room, but the fact that they didn’t take care of their illness up front.”

Overall, he said, the plan would give the working poor health care insurance coverage and it will be cheaper in the long run, because they won’t be inclined to wait until their illness is so advanced that it costs a lot more to treat.

“The problem I see here in Lansing is that I would have never guessed that everything we do is based on who we want to be elected next time, rather than what’s best for the citizens of this state. It just seems that way to me, and it makes me pretty sad. I think the governor has had a number of good ideas that aren’t getting implemented, just because there’s an election coming up.”    

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