House reports healthier budget

Jan Hudson

On Tuesday the House Appropriations Committee reported its recommended budget for the Department of Community Health to the full House. While the recommendation isn’t great, it is far superior to that passed by the Senate.

The House budget is about $103 million in general fund more than the Senate and avoids many of the most onerous cuts in the Senate-passed budget including: a cut of $57.5 million to non-Medicaid mental health funding (House reduction is $3.8 million); the elimination of some caretaker relatives and 19- and 20-year-olds from Medicaid; a 4 percent additional rate reduction to some physicians; and more cuts to the Healthy Michigan Fund, to name a few.

It will be a major challenge to maintain the House level of funding in view of the Revenue Estimating Conference that identified a $244 million revenue shortfall for the current year and about a $1 billion shortfall for FY2011.

Will policymakers find the courage to step forward and recommend revenue solutions to these problems rather than continuing their “cuts-only” approach?

I keep wondering: Do the facts really matter? A recent report by the Senate Fiscal Agency once again documents that Michigan is not a high-tax state. Will that fact matter to the Senate leadership? Or, will leaders continue to balance the budget on the backs of Michigan’s low-income families, children, elderly and disabled?

The cuts in Medicaid eligibility recommended by the Senate will not be possible under federal health reform maintenance of effort provisions, and with this knowledge, the House rejected the Senate proposal. This is good news for the “optional groups” whose Medicaid coverage was recommended for elimination. A report recently released by the League documents that the state has made little, if any, progress in adequately funding the Medicaid program over the last six years.

Without the federal recovery funds, and the corresponding maintenance of effort on eligibility over the last three years, it is difficult to say what the Medicaid program would look like today.

As it is, the state has enrolled about 420,000 more Medicaid-only recipients (those not receiving any cash assistance) since FY2005 and now, fortunately, can’t reduce eligibility without the loss of federal funds.

It is stunning to note the growth in the number of individuals who qualify only for Medicaid – – they receive no cash assistance. From fiscal years 2000 to 2009, that number nearly doubled, increasing from 652,000 to 1.2 million, as unemployment grew relentlessly and employer-sponsored coverage declined or became unaffordable. The number of Medicaid-only enrollees as of April 2010 is 1.4 million.

It is good news that both the Senate and House restored dental and podiatric services for adult Medicaid recipients; however, they could become targets to balance the budget given the new revenue projections.  Elimination of these services makes no fiscal or public policy sense particularly with the high incidence of diabetes in this state and the importance of these services in managing this disease.  Will that fact matter?

There is nothing wrong with raising the revenues to pay for the services Michigan residents want and need.  It does, however, take leadership and courage.

— Jan Hudson

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