Consumers Likely To Feel Health Claims Fee Effect
LANSING (AP) - Michigan residents with health insurance could get hit this fall with a premium increase tied to a new assessment on health insurance claims.
The assessment is intended to raise $400 million the state can use to draw $800 million in federal funds for its $11.5 billion Medicaid program, two-thirds of which is paid for by the federal government. Not passing the assessment could tear a $1.2 billion hole in the Medicaid budget, which provides health care for nearly 2 million low-income Michigan residents, most of them children, seniors, pregnant women or people with disabilities.
The lost funds could result in some patients being dropped from the Medicaid program, or services being cut. It also could force the state to reduce the amount it reimburses hospitals, doctors and health care providers who treat Medicaid patient by as much as 20 percent, the Michigan Health and Hospital Association has warned. Some Medicaid patients already have trouble finding doctors who will treat them, and more physicians might stop seeing Medicaid patients if reimbursement rates drop further.
The insurance claims legislation "protects access to basic and essential health care services for hundreds of thousands of Michigan children, families, elderly and disabled residents who depend on Medicaid for their care," association President Spencer Johnson said in a statement after the bills passed the Senate.
Hospitals that treat the uninsured end up passing along some of the costs to people with health insurance, so an argument can be made that insured customers already are paying a hidden tax. Medicaid is a better way to provide health care to the needy, supporters say.
Yet the 1 percent fee is likely to be felt more directly by consumers. Insurance companies such as Blue Cross-Blue Shield of Michigan would be responsible for paying the assessment, but the cost probably would be passed along to companies that buy insurance coverage and then to their employees, said Mary Ann Cleary, director of the nonpartisan Senate Fiscal Agency.
Blue Cross spokeswoman Helen Stojic said Friday that the state's largest insurer is reviewing the legislation. She estimates the fee would cost Blue Cross customers more than $100 million dollars each year. It would be up to each of those customers to decide whether they ask employees to pick up the cost.
Many workers already are shouldering a higher percentage of their health care costs, and lawmakers are considering bills that would require public workers to pay 20 percent of their health care premiums or cap the amount their employers could pay toward health insurance.
The new assessment is intended to replace a 6 percent use tax - similar to a sales tax - that health maintenance organizations now pay. The federal government could bar Michigan from collecting the use tax on HMOs, so Gov. Rick Snyder's 2011-12 budget proposal recommended applying a 1 percent assessment to more claims.
The fee wouldn't apply to claims covered by the federal Medicare program for seniors, the Veterans Administration and fee-for-service Medicaid services. Federal employee health insurance claims also would be exempt, as would the money patients spend on out-of-pocket expenses such as copayments, coinsurance and deductibles.
Services provided in Michigan to out-of-state residents would be exempt, as would payments made through automobile insurance and workers' compensation. Three small insurers in the state would be required to pay a much smaller assessment of 0.1 percent.
Legislation to put the fee in place Oct. 1, when the new fiscal year starts, passed the Senate on June 30, although not without some difficulties. The House Appropriations Committee plans to deal with the bills over the summer but the full House is unlikely to vote on them until lawmakers return to regular session in September.
The governor had hoped lawmakers would send him the bills by June 30 so the state would have several months to implement it. But some groups have given lawmakers an earful over shortfalls they see.
"There's got to be constraints on the amount of funds that are collected and what those funds are expended on," said Delaney Newberry, director of human resource policy for the Michigan Manufacturers Association.
She estimates 91 percent of manufacturers offer health care coverage to their employees, compared to 71 percent of all other industries. She said the tax will fall "disproportionately" on manufacturers and self-insured companies.
The MMA prefers a flat cap on how much the fee can collect and objects to a medical inflation adjustment that allows the amount to increase annually, saying there's a "natural inflator" because the amount of health care claims will increase each year regardless. The association hopes to persuade House members to change the bills.
Opponents to the MMA changes say the amount raised needs to take into account inflationary increases and other factors to keep up with the cost of providing health care.
Copyright 2011 by The Associated Press. All Rights Reserved.
