1 percent health claims tax approved by Legislature

On the same day legislators approved SB 7, which capped public employers' health insurance contributions and shifted thousands of dollars in benefit costs to public employees, it also rammed through two bills increasing the cost of health insurance for all Michigan citizens, including those same public employees.

The bills, Senate Bills 347 and 348, create a 1 percent tax on all medical claims incurred in Michigan, including medical claims paid by MESSA. The claims tax will likely increases costs for education employees by $20 to $24 million annually. The tax is intended to replace a 6 percent tax on Medicaid HMOs that currently raises $400 million to fund operations of the state Medicaid program. The $400 million is also used as the state match to leverage an additional $800 million in federal funding for Medicaid.

House Democratic Leader Richard Hammel (D-Mount Morris), whose caucus largely opposed the bills, said, "Under the guise of saving Medicaid and taxing insurance companies, the governor and Republican leaders have passed a tax that is not needed because despite rumors, the federal government has not given notice that our current funding system has to be changed. This new tax will simply mean increases in already high insurance rates paid by the people of Michigan.”

In other legislative action on Wednesday:

- Both chambers approved changes to Michigan’s cash assistance programs for poor families – a move that further harms thousands of disadvantaged Michigan students.  According to recent Kids Count data, one-in-five Michigan children lives below the poverty line.  The bills, HB 4409-4410, now go to the governor for his approval.

- The House passed HBs 4005-4006, which would mandate that school board elections be held in November of even-numbered years.  Under the banner of saving money, this is yet another state edict to local communities that would put school board races at the bottom of the ballot beneath many other higher profile races and cause school board members to take office in the middle of school years.  The bills now go to the Senate for their consideration.