By Evie Zois Sweeney
Muchmore Harrington Smalley & Associates
Senior Lobbyist

September 2012 – Passage of the Federal Patient Protection and Affordable Care Act of 2010 has undeniably become one of the most contentious and polarizing pieces of legislation to grip the country in decades. As the national discussion rages, further fueled by the presidential election in November, Michigan’s State Legislature is embroiled in an equally passionate debate. Philosophical differences regarding implementation of the Act continue to divide most Republican and Democratic members of the legislature, but, in a unique twist, reaction to the bill has also pitted the Republican-controlled Senate and Governor Rick Snyder against the Republican-controlled House of Representatives.

For months, the legislature has been holding committee hearings and debating the merits of Senate Bill 693, a bill introduced by Senator Jim Marleau (R-Lake Orion). Senate Bill 693 would create the MIHealth marketplace act. The MIHealth marketplace would have served as the nonexclusive health insurance clearinghouse of the State of Michigan. The bill was passed by the Michigan Senate in November 2011 and has sat in the House Health Policy Committee ever since.

House Republicans, preparing for a potentially competitive election in November, have publicly decried the need for a health exchange, and as such have vowed to postpone implementation until all questions surrounding the exchange have been properly vetted and discussed. To some extent, most pundits believed various aspects of the Act would be ruled unconstitutional by the Supreme Court, so few legislators felt compelled to act prior to a ruling. However, in response to the Supreme Court’s June decision, a renewed urgency for action began gripping many stakeholders, and particularly the Snyder Administration where the Departments of Community Health and Licensing and Regulatory Affairs face substantial hurdles in developing the necessary technology to implement provisions of the act by set federal timelines.

House Speaker James Bolger tasked the House Health Policy and the House Appropriations Subcommittee on Licensing and Regulatory Affairs to hold joint hearings where answers to the following questions were sought:

• The language in Obamacare says federal penalties only apply if a state sets up an exchange. However, the IRS has ruled that mandates and penalties will apply whether the state or the federal government establishes the exchange. Therefore, will Michiganders face an individual mandate and will Michigan citizens and job providers face the tax penalty if the state does not establish an exchange?

• What specific flexibility does the state of Michigan have with regard to the details of an exchange and, based on that flexibility, what parameters should the state be sure to include?

• What are the advantages and disadvantages to a health exchange established by the state versus one being established by the federal government, specifically for individuals, job providers and state government?

• Are there private companies similar to Travelocity or Orbitz that would be able establish a marketplace exchange for Michigan citizens to compare and shop for insurance and, if so, would such privately run systems meet the mandates of the federal government?

Despite a myriad of testimony from a number of stakeholders (begrudgingly) encouraging legislative action, many House Republicans remained unconvinced and unsupportive of the need to act, not only on SB 693, but on appropriating a $9.8 million grant awarded to the state by the Federal government to assist in the planning of a state run exchange.

In a last ditch effort, the Governor appealed for action to House Republicans in a caucus on August 15, 2012. The need to appropriate the $9.8 million grant was imminent and without legislative approval, the state would be forced to pursue other options, including the potential of a federally run exchange. The House Republicans remained unconvinced.

On August 22, 2012 the Governor announced Michigan would no longer be pursuing a Michigan run exchange. Instead, Michigan will begin the process of establishing a “partnership” with the federal government. Details on implementation and process continue to remain largely unknown, but the Departments of Licensing and Regulatory Affairs and Community Health continue to solicit details from the Federal government.