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This update is being reissued to correct a statement about SB7 and HSAs that was contained in the original bill but not the final version of the bill that passed. Please delete the last version of this update. We apologize for any inconvenience.
Exchange Blog—September, 2011
From NAHU Exchange Liaison: Dominic Siciliano
The Exchange Legislation Introduced in the MI Senate!
Earlier today, Senator Jim Marleau (R) – Lake Orion, introduced legislation creating the “MiHealth Marketplace Act.” The legislation comes a week after the Governor delivered a special message on healthcare that included having the state set up non-profit healthcare exchange. As you know, the PPACA requires states to establish an exchange or the federal government will run one for them.
Your MAHU leadership team, along with our lobbyist Gary Reed, has been working diligently meeting with legislators educating them on why agents are needed to operate in the exchange and what role the required “navigators” should have within the exchange. We were very encouraged over the course of the past two weeks as legislative and departmental staff has asked us directly for our input in the specific language surrounding Navigators and Agents.
The bill that was introduced today has some of our language, but not all of it, and we have a lot more work to do. Our intent was, and continues to be, to see language in this bill that ensures Michigan residents have access to insurance agents without restriction on plan price or product. Additionally residents should be protected from unlicensed individuals that provide advice on insurance plans, products and price – navigators should not be allowed to become unlicensed insurance agents!
We still believe it is the intent of the lawmakers to keep the current system of agents in place and limit the role of navigators in the exchange.
The Timeline
The bill needs to be assigned to a committee now and go through hearings. There will be a time for groups to submit changes and for the bill to be revised. Once the Senate votes on it, the bill will move to the House for the same process. Once it passes the House, if the bills most likely will be different, there will be joint hearings and more revisions.
Governor Snyder, in a health care speech last week, indicated he would like the legislature to pass the bill by Thanksgiving. Soon you will be receiving information on MAHU’s Fall Legislative Day in Lansing - an opportunity for all agents to voice their concerns on the legislation to our elected officials.
What to Think
Our leadership team, although disappointed with this bill, are not letting ourselves get too down or overreact too quickly. We have been optimistic and encouraged up to this point with the positive support we have been hearing from key members of the House and Senate all summer. We now have to go do the hard work of revising the bill.
We will begin to communicate more often now that we have movement.
Incidentally, there was a really good article that came out in Crain’s last week that outlined the Heath Exchanges in Mi. Steven Hilfinger, director of the Michigan Department of Licensing and Legislative Affairs was interviewed and confirmed agents will play a role.
Claims Tax SB 348 and the Publicly Funded Health Insurance Contribution Act SB007
SB 348 was signed by the Governor yesterday, and assigned Public Act 142 of 2011; SB 7 passed both houses and is on the Governor’s desk awaiting signature.
The tax in SB 348 is considered crucial to ensuring the 2011-12 Medicaid budget is balanced. This bill was not a stand-alone issue and is a piece of the overall tax and budget conversation that resulted in the death of the Michigan Business Tax. The tax will raise an estimated $400 million on health insurance claims and leverage another $800 million in federal Medicaid matching funds. This bill had to be created because the current Medicaid tax for federal matching purposes is no longer valid. Therefore, the current bill had to be repealed and this tax created, otherwise Michigan faced losing $800 Million in Federal Matching funds for Medicaid. Political opposition to the bill would have been fruitless as it had little opposition, the new Governor was behind it and no one wanted to stand in the way of Michigan continuing to be able to fund Medicaid. One thing to consider about this bill: the claims tax spreads the cost across a larger demographic as funding Medicaid this way captures all players including ERISA plans. Spreading out the funding in this manner may actually lower the amount that small business (1-99 lives the majority of agent and broker clients) pay as state insurance mandates usually cover only non-ERISA fully insured plans.
SB007 is known as "publicly funded health insurance contribution act".
A Legislative Analysis by the House Fiscal Agency describes the act and its intended effects. To paraphrase their report:
A "Public employer" means this state; a city, village, township, county, or other political subdivision of this state; any intergovernmental, metropolitan, or local department, agency, or authority, or other local political subdivision; a school district, a public school academy, or an intermediate school district, a community college or junior college or an institution of higher education.
A "Medical benefit plan" means a plan established and maintained by a carrier or one or more public employers that provides for the payment of medical, optical, or dental benefits, including, but not limited to, hospital and physician services, prescription drugs, and related benefits, to public employees.
Under the bill, a public employer that offers a medical benefit plan to its employees would be prohibited from paying more of the annual premium or illustrative rate (and any payments for reimbursement of co-pays, deductibles, or payments into health savings accounts or similar accounts used for health care, optical, or dental costs) than a total of $5,500 for single person coverage, $11,000 for individual and spouse coverage, $12,500 for individual and child or children coverage, or $15,000 for family coverage. The bill would require the state treasurer to adjust the maximum payment amounts annually based
on changes in the medical care component of the United States consumer price index for the most recent 12-month period for which data were available.
Rather than comply with the hard cap requirements referenced above, a public employer could opt to instead comply with a requirement that it pay no more than 80 percent of the total annual cost or illustrative rate of all the medical benefit plans it offers to its employees. For state employees, the designated official could opt for this alternative; for other public employees, a majority vote of the employer's governing body would be required.
Under this option, a public employer would be prohibited from paying more than 80 percent of the total annual costs of the medical benefit plan it offers and employees and elected officials would be required to pay 20 percent or more of the annual costs. The bill authorizes a public employer 80% of the cost per covered employee or elected officer of any self-funded or non-self-funded medical benefit plan. The maximum allowable payments calculated under this section apply whether the medical benefit plan provides coverage for the employee or elected official only or includes coverage for the employee's or elected official's family or dependents.
Based on data from the current health insurance plan offered by the state to employees, limiting the state's contribution for each employee hired before April 1, 2010, at 80 percent of the average total health insurance cost per employee would result in an annual state savings of $64.4 million. Of that amount, roughly 50 percent of the savings, or $32.2 million, would be realized in the state's General Fund. The remaining savings would be associated with employee compensation costs funded by federal or restricted funding sources
Local Government and Higher Education Fiscal Impact:
Comprehensive data on the contributions made by employees and employers toward medical benefit plan costs for local governments, school districts, community colleges, and public universities are not available. Therefore, no estimate can be provided as to the amount of savings those entities would realize under the provisions of Senate Bill 7 (H-6). Anecdotal information, however, indicates that, proportional to total health insurance costs, savings could be significantly lower for some public entities.
So this bill is all about adding transparency and saving the state and those public entities with state funding on the cost of their employee health insurance. Generally something we as agents and brokers strive to do with our clients every day.
Your MAHU Legislative Team:
Jeff Thomas, Legislative Chair,
Cathy Cooper, President
Mike Embry, Regional VP
Dominic Siciliano, Exchange Coordinator
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