Big Band-Aid over budget hole

Sharon Parks

It appears that House and Senate leadership and the administration have hammered out a budget deal that will avert a third state shutdown in four years.

I suppose we should all be relieved but somehow the whole thing leaves some of us feeling pretty frustrated. The final budget resolution seems to be a very large Band-Aid over a gaping hole.

Included among the budget “fixes” are proposals for tax amnesty ($61.8 million), state employee retirements ($60 million), use taxes on Health Maintenance Organizations ($377.3 million), various liquor reforms ($9 million), and a shift of $208 million from the School Aid Fund to the General Fund to avoid further cuts to community colleges.

The budget deal also includes more cuts in state spending—3 percent to all departments and reductions of $50 million each in the departments of Human Services, Community Health and Corrections.

It’s too early to know how $150 million will be squeezed out of these departments, on top of reductions that have been made since 2004 and continued in each subsequent year’s budget. (Notable exceptions are the optional Medicaid services that were eliminated in the 2010 budget but restored in the 2011 budget deal.)

Thank goodness for the federal Recovery Act money that is spread throughout the budget, and for the recent extenstion of the enhanced Medicaid match.  Those dollars helped avoid deeper cuts than are being made—for now. 

Finally, there is wide acknowledgement that the root of our problem extends beyond the current economic firestorm. Yet, what’s missing in this budget deal is any serious attempt to address the state’s structural deficit. It’s a “get out of Dodge” budget that dumps the problem squarely in the laps of the next administration and Legislature. 

Maybe the newcomers will be the breath of fresh air that is needed.  Maybe they will be full of good ideas, resolve and the leadership that is needed to turn Michigan in the right direction. Or, they may come to Lansing and waste valuable time as they learn their assumptions were faulty and their stereotypes untrue. 

I hope it’s not the latter. This train is headed for the cliff, as billions of federal Recovery Act funds end and our own state revenues continue to drop in response to the decline in personal income in Michigan.

— Sharon Parks

1994 principles relevant today

Jan Hudson

Federal health care reform is starting a new chapter in Michigan. Beginning tomorrow, enrollment will open for the new high risk pool  for those with pre-existing conditions who have been uninsured six months. Coverage will be effective Oct.  1.

This component of the health care reform law got off to a rocky start when the Michigan Legislature failed to approve the expenditure of the federal funds for the high risk pool.  The federal government had to step in and make alternate arrangements. 

Health care reform implementation merits ongoing and careful thought and planning by policymakers, with input and monitoring by consumers, to ensure the best possible outcome for all of us.  

The Michigan League for Human Services developed a set of health reform principles in 1994 that are still relevant today and can serve as a good resource. 

They provide a good road map for navigating many upcoming implementation issues including:

• The critical importance of a comprehensive package of benefits for those newly eligible for Medicaid (there is an option to provide a lesser package of benefits) as well as for those who purchase coverage through the Health Insurance Exchange (the “Expedia” of private insurance options).  A comprehensive package would include the full range of mental and physical health services, as well as dental and substance abuse services.
• Adequate state regulatory and monitoring resources to ensure mandates are implemented timely and effectively, and that there are strong enforceable consumer protections.
• Availability of access to quality care both geographically and culturally.  There are many opportunities in the law to expand or promote primary care.
• Reasonable and adequate provider payment rates in public programs to ensure that current and newly eligible persons have access to care and not just a card.
• An increase in the meaningful and cost-effective use of health information technology.
• Promotion of quality, not quantity, of care through incentives or payments for outcomes, or other payment reforms for providers; and quality consumer education to help guide treatment decisions.
• A priority for funding prevention and wellness options included, but not funded, in the law.
• Development of effective cost containment strategies that maintain or improve quality care and are not simply code words for cuts in programs or services.

 Additional food for thought is provided by the State Consortium on Health Care Reform Implementation in a State Health Policy Briefing. This brief describes 10 aspects of federal health reform that states must get right if they are to be successful in implementation.

The group’s top priorities include:

1. Be strategic with insurance exchange

2. Regulate the commercial health insurance market effectively

3. Simplify and integrate eligibility systems

4. Expand provider and health system capacity

5. Attend to benefit design

6. Focus on the dually eligible

7. Use your data

8. Pursue population health goals

9. Engage the public in policy development and implementation

10. Demand quality and efficiency from the health care system.

(The State Consortium on Health Care Reform Implementation is a collaboration among the National Governors Association, the National Academy for State Health Policy, the National Association of Insurance Commissioners, and the National Association of State Medicaid Directors.)

There have been and will continue to be numerous opportunities for comment as federal regulations are developed and finalized.  The federal government has established a website where you can readily view the regulations for which comments are being accepted.  You are encouraged to take advantage of these opportunities and let your voice be heard in this historic process.

It will take ongoing vigilance to ensure the best implemenation for all.

 —  Jan Hudson

Surprise! Voters supported taxes

Sharon Parks

The August 3 primary election said a great deal about what voters care about, in addition to their preferred candidates for office. The election results sent a clear message that voters value public services, and they are willing to pay for those services.

While this shouldn’t come as a surprise to some of us optimists, an analysis by The Center for Michigan shows that voters overwhelmingly stepped up to the plate to pay for good roads, fire and police protection, services for seniors and libraries. 

According to one analyst, “People are finally starting to really feel the effect of government cutbacks.”

The Center for Michigan’s analysis showed the following: 

• Voters approved 86 percent of the 623 ballot proposals affecting how much they would pay in taxes or fees.
• Voters approved 96 percent of the requests to either renew taxes or restore rates that had previously been reduced.
• Voters supported 69 percent of the proposals that were flat-out tax increases. 

These election results counter the noise from the Tea Party folks that the electorate is fed up, doesn’t value government, and is not willing to pay a dime more for government services. 

Our citizens aren’t stupid. They know what they need; they know what they value.  By in large, they want essential services continued in their communities even though the state will no longer pick up the tab.

There are other services, equally important, which have been cut and are likely to be cut further. The General Fund budget, with a deficit of at least a half-billion dollars or more, depending on whose numbers are used, is not yet resolved. Many more services are likely to be cut if the Legislature can’t agree on revenue solutions.

At that point, voters will be looking at cuts in higher education as they attempt to send kids to college, and cuts in Medicaid as they attempt to deal with their own medical issues or those of parents or grandparents.

There’s more — the state licenses and inspects day care facilities where our children and grandchildren spend time each week; they also license and inspect nursing homes where many of our family members reside. Those of us who eat out occasionally or often should take comfort in the fact that restaurants are also inspected. The parks and forests that we all enjoy are maintained at government expense — taxpayer dollars. 

Considering The Center for Michigan’s analysis, candidates should welcome the opportunity to talk taxes with voters. Let the voters know what’s at stake and ask whether they want to go without the services they are used to having. The answers may surprise more than a few hopeful candidates for state office. 

— Sharon Parks

Can health care reform cure my headache?

Jan Hudson

Every time I participate in a discussion on the aspects of health care reform, my head hurts more.  I continue to be awed by the intricacy, complexity, and breadth of this new legislation. But at the same time, I am inspired by the great opportunity to make positive changes to public programs, insurance products, and the health care delivery system, to name just a few.

There was a dizzying array of information provided at the Public Policy Forum co-sponsored by the Michigan League for Human Services and the Michigan Health Insurance Access Advisory Council on April 23, followed by a forum sponsored by the Detroit Regional Chamber and the Federal Reserve Bank of Chicago – Detroit Branch on April 26 and 27.

Public Sector Consultants brought a diverse group together May 12 to hear presentations by Department of Community Health Director Janet Olszewski and Insurance Commissioner Ken Ross, and to provide feedback on what next steps make sense. State staff are working diligently to identify all the facets that must be addressed to develop a strong foundation for ongoing implementation efforts.

The complexity of the federal health reform legislation will make it an ongoing challenge to implement. Thank goodness every component is not scheduled to be implemented immediately, and hopefully there is enough time to get it right.

The health care reform legislation will touch all of us. A few of the benefits follow:

• 32 million people are expected to gain health care coverage by 2019.
• Medicaid will be expanded (2014) to all families or individuals with incomes below 133 percent of the federal poverty level (about $14,400 for an individual).  A federally designated category or group will no longer be required to be eligible; the federal government will cover the cost of the new enrollees for the first three years.
• Young adults can remain on their parents’ health care plans up to age 26, without being an IRS-defined dependent or being in school.
• When the Insurance Exchange is implemented in 2014, subsidies will be available to assist families with incomes up to 400 percent of the poverty level (about $88,000 for family of four) be able to afford coverage. In addition, cost-sharing caps, on a sliding income scale, will also be implemented.
• Insurers will be prohibited from denying coverage for pre-existing conditions or cancelling coverage when an insured person gets sick. Insurers will also have to use a high percentage (80 percent to 85 percent) of  premiums for patient care, and will no longer be able to establish annual or lifetime limits on benefits.
• Small businesses will receive subsidies (up to 35 percent) to help them afford coverage for their employees.
• The Medicare Part D “donut hole” (the period when costs have reached a high level, but no assistance with drug costs is available) will gradually be reduced.
• Programs to promote wellness and prevent chronic disease will become a major focus.

These are only a small sampling of the extensive provisions included in this historic legislation. Many organizations are putting information on their websites. The key thing to remember in reviewing these documents is that they are works in progress, and may be updated frequently as more clarification or regulations are issued by the various federal offices involved in implementation. 

Families USA, the Kaiser Family Foundation, The Commonwealth Fund, and the Robert Wood Johnson Foundation include extensive materials on the health care reform legislation and its implementation.

I think Atul Gawande in The New Yorker in December articulately summed up where we are and what we need to do to make this work:

 “At this point, we can’t afford any illusions: the system won’t fix itself, and there’s no piece of legislation that will have all the answers, either… But if we’re willing to accept an arduous, messy, and continuous process we can come to grips with a problem even of this immensity. We’ve done it before.”

— Jan Hudson

First Tuesday: Gov’s budget has balance

Sharon Parks

Check out the latest “First Tuesday” newsletter. Each month it features a column by League President & CEO Sharon Parks and offers short updates on the League’s work. To subscribe sign up here.

Here’s today’s column:

Last month when I wrote my First Tuesday column the governor was about a week away from presenting her final, and probably most difficult, budget. We’ve now had a chance to look at that budget and, while it is not all that we would like to see, it is a balanced approach. The FY2011 Executive Budget includes a mix of spending cuts, tax cuts for business, new revenues and reforms. 

 Although the League is very disturbed by the prospect of more cuts in spending and massive early retirements, we’re solidly in support of expanding the sales tax to services. (See story below “From Poodle Cuts to Pedicures…”) We are concerned, however, about lowering the sales tax rate to a point that the revenue yield is less than needed.  

The League also supports the governor’s proposed physician’s tax as a means of averting another reduction in Medicaid reimbursement rates. We also believe the governor, like most of the nation’s governors, is right in assuming at least two more quarters of federal recovery money through a higher Federal Medical Assistance Percentage (FMAP) matching rate. 

While the governor’s plan was in large part drawn from the Business Leaders for Michigan Turnaround Plan, the business community doesn’t like it — even though the budget calls for significant business tax cuts. And, despite this balanced approach, it appears by all accounts that the budget is dead on arrival in both the House and the Senate, as the House speaker and Senate majority leader both call for a cuts-only budget.  

The prospects for folks who are desperately trying to make it in this brutal economy are bleak indeed. A cuts-only budget would not only continue the deep cuts made in the current year’s budget, but would further shred the safety net and curtail a wide range of services in local communities across the state.

So much is at stake. A generation of children needs the opportunity to realize their full potential. Tens of thousands of adults in Michigan need the opportunity to gain the skills and education to compete for a job in the workforce that pays a family-sustaining wage.  Communities that have seen their infrastructure ravaged by this economy need to be vibrant and safe once again. 

The League has joined an important effort called A Better Michigan Future. The campaign’s platform also offers a balanced approach to solving Michigan’s fiscal problems.  It does so in way that modernizes the state’s tax structure and provides transparency and accountability. I hope everyone will look carefully at this approach and join in an effort to chart a new course for Michigan.