Monday, December 5, 2016

Notebook Page 19 October 2016

October has been a quiet month for the legislature. The House was scheduled for one day of session
and cancelled that and the Senate was in Lansing for one week’s worth of work during the
middle of the month. The only issue that concerned ACS CAN was the fix for the Medicaid funding
mechanic called HICA (Health Insurance Claims Assessment).

HICA was created a few years ago by the legislature when they found out the way they were collecting funding for Medicaid was not acceptable to the Centers for Medicare and Medicaid services (CMS). CMS stated that Michigan could not tax health insurance plans for having the ability to provide Medicaid services. So the legislature created HICA which taxed the health plans on the back end of service, taxing them at a rate of 1.25% of each claim they submitted to Medicaid for payment. This funding was then bundled and sent to the federal government where it could be matched and sent back to Michigan to pay claims.

Recently CMS has stepped in again saying that the funding source for matching funds needs to
come from a broad based revenue stream. This means they are looking for revenue that would
impact everyone in Michigan rather than just those using Medicaid. So the legislature created a
plan to deal with this situation. First the HICA would be repealed. The business community has
always been at odds with the HICA since it’s inception a few years back. Secondly a fund would
be created that would be used just to fund Medicaid. This fund would not be accessible by any
other programs. Finally a percentage of the income tax would be directed to this new fund leaving
less dollars for the state to appropriate in other programs.

This creates a major shift in how we fund Medicaid and it is the hope that this will allay the
concerns that CMS has about Michigan’s Medicaid funding. The legislation was passed by the
Senate and was sent to the Governor’s office for his signature. The governor and his administration
signaled during this process that they were not in favor of the legislation because they didn't
feel it addressed the problems stated by CMS. On Thursday, October 27 the Governor honored
his concerns and word and vetoed the legislation. It is unknown at this time if the legislature will return to override the Governor’s veto.

If the legislature doesn’t return for a veto vote right away, they won’t see real business until after
the Thanksgiving/Hunting break in the middle of November. This lawmaking period will really
be controlled by the elections. Looking at some of Michigan’s battleground seats in the House,
the chances of the House moving to a 55/55 split of Republicans and Democrats is looking better
and better every day. This would mean that Republicans would lose control of the House
and we could see a ton of legislation move that fits in the agenda of conservative republicans
during lame duck session. So we are in a wait and see mode for the upcoming elections.

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