Hallmark Medicaid Reform Legislation Passes State House

By Evie Zois Sweeney
Muchmore Harrington Smalley & Associates
Senior Lobbyist

June 2013 – In what many Lansing insiders are describing as one of the most bipartisan, herculean legislative accomplishments in recent memory, on June 13, 2013, the State House achieved what most naysayers considered impossible; passage of a Medicaid bill that would allow able-bodied adults 65 years old and younger with an annual income level up to 133% of the federal poverty level (FPL) to enroll in Medicaid.

What may not be obvious in that description; extending mandatory eligibility to this population was included in the Patient Protection and Affordable Care Act in 2010. The Supreme Court subsequently ruled that mandating states to expand Medicaid coverage was coercive and as such, expanding coverage became voluntary on a state by state basis.

With a Republican Governor and both legislative chambers controlled by conservatives, many Lansing pundits doomed the feasibility of passage from the start. But, with Governor Snyder enthusiastically supporting expansion early this year, in fact, assuming state savings into the Fiscal Year 2013-14 budget, the legislature was left in a conundrum. Until that is, some Republicans began framing the proposal as an opportunity for Medicaid reform, while also providing health insurance cost relief to individuals and to the business community by reducing the cost shift of uncompensated care. Heated debate has ensued in earnest over the last several weeks with legislators hearing impassioned pleas favoring both sides of the issue. However, the final version of House Bill 4714 managed to balance the necessary reforms Republicans needed while preserving the safety net for those most in need–a provision Democrats demanded. The following includes various highlights of House Bill 4714 as passed by the House on June 13, 2013:

• The Department of Community Health (DCH) shall seek a waiver from the U.S. Department of Health and Human Services (HHS) to do the following:

a) Enroll eligible individuals, who meet citizenship provisions into a contracted health plan that provides an account into which money from any source including the enrollee, the enrollee’s employer and public or private entities on the enrollee’s behalf, can be deposited to pay for health expenses.

b) Require enrollees with annual incomes between 100%-133% of FPL to contribute not more than 5% of income for cost-sharing requirements. (5% contribution does not apply for first 6 months of enrollment).

c) Incentivize healthy behaviors by reducing cost sharing requirements, i.e., participation in a risk assessment to identify unhealthy characteristics like alcohol and tobacco use, obesity, and immunization status.

d) Develop incentives for enrollees who assist DCH in detecting fraud and abuse in the Medicaid program.

e) The creation of a targeted assessment related to employability, which shall promote employment related services and job training available to lower caseloads by assisting able-bodied unemployed adults into the workforce.

f) Requires the Department of Insurance and Financial Services to examine financial reports of health insurers and evaluate the impact expanding coverage has had on rates. The findings shall be considered in the annual approval of rates.

g) DCH shall explore and develop a range of innovations and initiatives to improve the effectiveness of the program and lower healthcare costs.

h) A medical waiver allowing Michigan’s expansion proposal (as explained within the confines of HB 4714) must be approved by HHS by December 31, 2015. If the waiver is not approved, expanded medical coverage will no longer be available. In addition, the waiver must allow individuals (between 100% to 133% of FPL) who have exceeded 48 cumulative months of coverage to chose to either purchase private insurance through an exchange OR remain in Medicaid, but increase cost-sharing requirements up to 7% of income. In addition, the bill requires HHS to make a determination on approval of Michigan’s proposed waivers by December 31, 2013. If the waivers are rejected, Medicaid expansion is dead.

The bill now awaits Senate action where it is expected to face continued resistance from the majority party. Will the bipartisanship experienced in the House carry over to the Senate and ultimately send the bill to the Governor’s desk? Time will soon tell.

Date written: June 17, 2013