State Budget Continues to be Front and Center

by Douglas Paterson, MPA, Director of State Policy, Michigan Primary Care Association

There is a real desire on the part of Michigan legislators to get the budget for this year and next resolved so they can go home to begin campaigning and avoid criticism for not getting their job done.  However, several big issues remain:

1)      How to fix the $300 million hole in the FY 2010 budget

2)      What targets do they give to sub-committee chairs to begin negotiations between the House and Senate appropriations subcommittees for each department until the answer to the first question above is determined and until it is known whether FMAP will be extended

Discussions about how to fix this year’s budget revolve around whether to use any of the School Aid Fund (SAF) excess revenue to address the General Fund (GF) deficit.  Many House democrats are strongly opposed to this option.  Another possible solution proposed yesterday at a meeting of the “quadrant” (House and Senate leaders from both parties) is to once again securitize the state’s tobacco settlement money for a third time.  Lawmakers first securitized tobacco dollars in 2005 when they created the 21st Century Jobs Fund with $400 million.  They used this tactic again when the state faced an $800 million budget deficit in the 2006-2007 fiscal year, securitizing some $415 million of the tobacco dollars.

The U.S. Senate continued this week to debate the Extenders Bill (HR 4213), the federal bill containing the FAMP extension.  A procedural vote to end debate failed Wednesday and was followed by Finance Chair Max Baucus (D-MT) unveiling a smaller substitute version of the legislation.  The revised language retains the FMAP extension at $24.2 billion, but reduces the Medicare physician payment update (“doc” fix).  There is still a possibility the $24.2 billion for the extension could be reduced.  The new version of the bill may be considered sometime today (Friday, June 18).

The “quadrant’ is expected to continue talks next week toward the goal of resolving these issues and setting budget targets.

Also of interest this week —the package of bills MPCA has been closely following, which originally intended to reform the state’s health insurance system, were substituted with bills that would oversee the transition to the new federal heath care program.

The legislation (SB 1242 and SB 1243) would now create the Michigan Health Services Advisory Commission to develop recommendations for changes needed to comply with, or avoid, the new federal health care plan and would allow Blue Cross Blue Shield of Michigan to begin using behaviors, such as smoking, in setting rates on all of its policies.

Senator Tom George said the purpose of the commission is to provide some public input on the state’s transition plan.  While Governor Jennifer Granholm has appointed a panel to oversee implementation of the new federal law, Senator George said that panel does not provide a role for legislators.


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