By Peter Luke/Bridge Magazine correspondent
(Estimated net fiscal year 2023 cost of expanding Medicaid in Michigan, per the federal Affordable Care Act. The expansion would, by that date, cover more than 600,000 single adults and reduce the ranks of the uninsured in Michigan by two-thirds.)
(Estimated net fiscal year 2023 cost of a Senate-passed bill, long sought by the Michigan Automobile Dealers Association, that phases in a sales tax exemption equal to the trade-in value of a car, boat, motorcycle or RV.)
(The net savings to the state budget over the next 10 years, if Medicaid expands, according to the Center of Healthcare Research and Transformation in Ann Arbor.)
So, Michigan, guess which proposal is speeding through your Legislature?
Senate Bill 89 was introduced on Jan. 29, reported out of the Senate Finance Committee on Feb. 5 and approved by the full Senate on Feb. 6 on vote of 34-2, with one senator excused. A week later, the dealers association’s latest PAC report brought total expenditures made during the previous election cycle up to $415,000.
Meanwhile, several blocks east of the Capitol on Feb. 6, Gov. Rick Snyder appeared at Sparrow Hospital with business and health care groups to formally back Medicaid expansion. The response from Republican House Speaker Jase Bolger reflected the general mood of a skeptical caucus: Before any decisions could be made, questions would have to be answered.
A similar response in the previous session — when the car sales tax bill was approved in the House 106-2 before ultimately stalling in the lame-duck session — doomed Snyder’s proposal to set up a state-based health insurance exchange, as authorized by the ACA. As of last week, Republicans still couldn’t be bothered to appropriate $30 million in federal funding for a state-federal exchange partnership that Snyder is establishing with executive authority.
In blocking the exchange, reflexive conservative opposition to government expansion in general and the Obama administration in particular could be characterized as taxpayer protection. Unlike, say, giving car dealers the keys to the state treasury.
Opposing Medicaid expansion, however, cheats Michigan taxpayers in any number of ways that opposing Republicans have yet to concede.
If Medicaid is expanded, 100 percent of the $2 billion annual cost through 2016 is funded by Washington, which drops its share to 90 percent by 2020. It would cover expenses — mental health care for single adults and off-site health care for an aging prison population — now almost exclusively funded by the state to the tune of more than $215 million annually, or more than $2 billion over 10 years. Half of the overall annual savings of $275 million projected by the Snyder administration would be deposited to cover the state’s future share of the expansion.
Steve Fitton, a state health official, reiterated to House and Senate Appropriations committees last week that the set aside would cover the state’s obligation through 2034.
So, there would be no immediate state costs for the immediate economic benefits of providing rationalized health-care access to an estimated 242,000 uninsured adults. Right now, those uninsured residents are still getting crisis health care – the cost of which is transferred to those paying premiums for employer-provided health insurance.
Nevertheless, a greater burden of economic proof currently applies to Medicaid expansion than tax reduction. Other Republican governors such as John Kasich of Ohio and Rick Scott of Florida made emotional moral cases for expansion in their states last week. Snyder’s argument, though, is based on dollars and cents.
In coming weeks, Republican lawmakers must make a choice:
– Trust the budget professionals who work for them and a governor of their own party, as well as those who work in the hospitals in their districts and lobby on their behalf in the Capitol hallways;
– Or reject those arguments on the basis that a federal government that has doubled spending in Michigan in the past decade and bailed out its auto industry can’t keep its promises.
In the end, it will be up to the economic titans back in legislators’ home districts that will make the difference. Health systems are eating millions in uncompensated care and employers are paying an extra $1,000 per employee because the cost of that care has been shifted onto their benefit plans. Such pressure should prevail. And the Michigan Health and Hospital Association’s PAC spent more than the car dealers in the last cycle — more than $677,000. The group additionally spent more than $1.1 million on lobbying during those two years.
Given that the relevant committee chairs either back or are open to expansion, but their committee members may not be, the first floor votes to expand Medicaid could be the last ones cast on a single big budget bill sometime in June. Lawmakers in both parties, but Democrats especially, will be confronted with a difficult choice likely to be decided in Snyder’s favor.
That is, as long as Snyder makes it clear that he won’t sign a budget without it.
Peter Luke was a Lansing correspondent for Booth Newspapers for nearly 25 years, writing a weekly column for most of that time with a concentration on budget, tax and economic development policy issues. He is a graduate of Central Michigan University.