By DAVID EGGERT, Associated Press

LANSING (AP) – Republican-led legislative panels on Thursday rejected expanding Medicaid eligibility to 320,000 Michigan residents next year but left open the possibility of reversing course in coming months if changes can be made to the health insurance program for the needy.

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Gov. Rick Snyder wants to expand Medicaid under the federal health care overhaul, saying it makes financial sense and is a chance to improve the health of people without insurance. But so far he has been unable to persuade fellow Republicans who control the Legislature.

The U.S. government would cover the full cost of new Medicaid enrollees for three years, phasing down to 90 percent in 2020 and after. The state would save $200 million a year initially because more people receiving mental health services and medical care with state aid would instead be covered with federal money. Snyder proposes tucking away half of the savings, so Michigan effectively would not owe anything for covering more people until 2035.

“As attractive as the front-end dollars are, we feel it is more prudent to examine the long-term sustainability of this,” said Sen. John Moolenaar, a Midland Republican who chairs the Senate health budget subcommittee that voted 3-0 for a Department of Community Health spending plan without the expansion. The lone Democrat on the panel abstained from voting.

Also Thursday, the GOP-controlled House Appropriations Committee approved a broad budget bill along party lines without Medicaid expansion, following the lead of a subcommittee that first nixed the expansion three weeks ago.

Moolenaar questioned whether the state can count on federal aid to be there down the line for Medicaid given the federal government’s debt and deficits. He also said higher government payments to primary care doctors with Medicaid patients – designed to align with better Medicare provider rates – will only last for two years under the federal Affordable Care Act, causing uncertainty for the state.

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Republicans may be open to Snyder’s proposal, however, if his administration seeks a federal waiver designed to keep Medicaid costs down – so participants pick up more of the cost of their care, for example, or are incentivized or rewarded to lead healthier lives. Details have been scarce.

“We’re going to look across the country and throughout difference insurance plans to find the best, most innovative approaches and see if that can be part of a solution,” Moolenaar said.

Advocates for the poor say there already are small co-pays in the Medicaid program and raising them would make the needy skip going to the doctor or getting other preventive medical care.

Asked earlier this week if Medicaid participants should have more “skin in the game,” Snyder said it is fair to discuss. He suggested integrating parts of his 2011 wellness plan into Medicaid but stopped short of giving specifics. Snyder’s plan recommends that residents have a healthy diet, exercise regularly, get an annual physical and not smoke. It also highlights key health measures such as body mass index and cholesterol level.
Snyder said his administration would step up its lobbying of legislators for Medicaid expansion in April and May. They hope to finalize the next state budget by June 1. Giving more people insurance coverage would make them healthier and allow them to get annual checkups, he said.

“Isn’t that a much better situation than putting someone in position of saying they have to go to the emergency room, they have to wait for it to become a crisis?” Snyder said.

Backers of expansion also say it would avoid an unintended consequence where thousands of low-income earners could neither enroll in Medicaid nor qualify for subsidized premiums when buying private insurance in a new online marketplace created by the federal health law. A recent study by Jackson Hewitt Tax Service said if Medicaid is not expanded, Michigan employers could pay $54 million to $81 million in annual penalties if certain employees purchase a government-subsidized plan.

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