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Medicaid expansion finally comes to Michigan

With Tuesday’s state Senate vote, Michigan became the latest state to approve Medicaid expansion, despite the desire of the majority of Republican legislators to screw the state’s working poor.

Under the Patient Protection and Affordable Care Act, states can expand Medicaid eligibility to people making less than 133 percent of the federal poverty level. The bill passed Tuesday covers Michigan residents with incomes of up to 138 percent of the federal poverty level. The maximum annual income needed to qualify ranges from $15,500 for a single adult to $26,500 for a family of three.

This expansion will add approximately 320,000 people to Medicaid coverage in 2014 and 470,000 by 2020 to the 1.9 million Michigan residents already covered by Medicaid, with the state’s uninsured population dropping by 46 percent. It is expected to create 25,000 jobs, while improving the health and well-being of thousands of Michigan residents at little state taxpayer expense.

Gov. Rick Snyder announced his support for Medicaid expansion, under his Healthy Michigan plan, in an attempt at damage control after his approval rating plummeted when he pushed through freeloading off unions, dishonestly called “right-to-work.”

Medicaid expansion makes financial sense when treatment of the uninsured places an $820 million a year uncompensated care burden on Michigan hospitals. Once Medicaid expansion is implemented in 2014, the federal government will pay the full cost until 2017, after which it would gradually be reduced to 90 percent by 2020. The state cost would then amount to $150 to $200 million per year. But under the expansion, the federal government picks up the state’s $280 million a year cost for providing mental health services to 50,000 low income uninsured residents. Snyder proposed using up to half the money saved by this federal funding takeover for a health savings account to pay the state share of Medicaid expansion, beginning with $103 million in the 2014 budget.

But while Snyder made sure the expansion program would be properly funded, nearly all the opposition to it came from his fellow Republicans out of their hatred for the Affordable Care Act.

The expansion legislation, House Bill 4714, was approved by the state House on June 13 by 76-31 vote. Democrats voted in favor by 47-1, while Republicans were opposed by 30-28. The House’s only Independent, a former Democrat, voted in favor.

The bill was sent to the state Senate on June 18, but it adjourned for summer vacation on June 20 without voting on Medicaid expansion. State Senate Majority Leader Randy Richardville (R-Monroe) then formed a Healthy Michigan Workgroup of six Republican state senators, led by Appropriations Committee Chairman Roger Kahn (R-Saginaw), to discuss the proposal. It submitted three bills to the Senate Government Operations Committee, all of which were sent to Senate floor on July 31. The first bill, introduced by Kahn, was similar to House Bill 4714, adding incentives for healthier lifestyles that improve or maintain one’s health. It passed in a bipartisan 4-0 vote, with one Republican abstaining.

The other two bills sought to scrap Medicaid and sabotage the Affordable Care Act, and passed by 3-2 party line votes, with Republicans in favor and Democrats opposed. The second bill, sponsored by Sen. Patrick Colbeck (R-Canton), sought to shift Medicaid recipients into state-subsidized commercial health insurance, with $75 per month premiums and high deductibles. The third bill, introduced by Sen. Bruce Caswell (R-Hillsdale), proposed shifting all Medicaid costs to the state, amounting to $380 to $500 million a year, and not provide for Medicaid expansion.

On Tuesday, Caswell’s bill was defeated by a lopsided 29-9 vote. Colbeck’s bill didn’t even come to the floor for a vote

The first vote on Kahn’s bill was 19-18 in favor, one vote short of the majority needed for passage. Colbeck, a fanatical opponent of health care reform, was expected to vote against it, creating a 19-19 tie, with Lt. Gov. Brian Calley, presiding over the Senate, casting the tie-breaking vote for passage. But a spiteful Colbeck abstained, causing the bill to be defeated.

The Senate immediately voted for reconsideration and recessed. An amendment was added to Kahn’s bill, banning hospitals from charging Medicaid patients more than 115 percent of what they charge Medicare patients. Sen. Tom Casperson (R-Escanaba), who had been expected to vote for the bill but had voted against it due to a misunderstanding with Richardville, switched his vote to yes. The bill then passed on a second vote, 20-18. All 12 Democrats voted in favor, while Republicans were opposed by 18-8.

Michigan now joins 23 other states and the District of Columbia in approving Medicaid expansion. There are 21 states that won’t implement the expansion, while five states are still debating the issue.

While the Medicaid expansion bill passed, there are several problems with it. The Healthy Michigan plan requires those covered by the expansion to pay five percent of out-of-pocket medical costs. After four years, the co-pay increases to seven percent or insurance could be purchased on the health care exchange. The five percent co-pay remains if a person is deemed medically frail from chronic disease, mental illness or inability to complete daily tasks of life.

The co-pay could make some major medical procedures unaffordable, with the bill allowing the creation of health savings accounts for Medicaid recipients to pay for such expenditures. Under the Affordable Care Act, the federal government would have to grant waivers for creating health savings accounts and choosing between a health insurance exchange or Medicaid after four years, with the waiver process taking up to 120 days.

The Affordable Care Act mandate requiring all Americans to have health insurance takes effect Jan. 1, with Medicaid expansion to be implemented on the same day. A bill in the Legislature needs a two-thirds majority to take effect immediately. While this two-thirds majority was achieved by the House, the Senate fell way short, and a vote for immediate effect after passage received a 24-14 favorable vote, two votes short of a two-thirds majority. While the House will vote on the Senate bill on Sept. 3, with a two-thirds majority approval expected, the Senate may make another attempt at immediate effect.

Without immediate effect, Medicaid expansion can’t be implemented in Michigan until April 1. This would cost the state $7 million a day, or more than $600 million of the $1.7 billion in federal Medicaid expansion money slated for Michigan in 2014. Uninsured low-income residents would face penalties ranging from $95 a year for an individual to $285 a year for a family.

But don’t expect the 18 Republican state senators who voted against the expansion while previously voting in 2011 to give most of themselves lifetime medical benefits, to care about that. While the Michigan version of expansion has its flaws and the process to pass it took much longer than necessary, it is a step in the right direction.