March 8, 2010
By Cami Pendell*
Governor Issues Executive Directive to Open Up State Healthcare Plan
Michigan Governor Jennifer Granholm (D) issued Executive Directive
2010-1 in an effort to clear the way for local units of government and other public entities such as school districts and universities to participate in healthcare benefit plans offered to state employees. The executive directive gives the directors of the Department of Management and Budget and the Office of the State Employer until June 30, 2010, to identify and remove any barriers to participation in the state's healthcare benefit plans by local units of government and other public entities. All of the state's healthcare benefit plans would be open to participation, including the state's preferred provider organization plan, health maintenance organization plans, prescription drug coverage programs, and dental and vision care plans. Opening up the state's healthcare benefit plans to other public employers and employees is one of
twenty-nine reforms unveiled by Granholm to transform Michigan's government. For many public employees that do not receive healthcare benefits, having access to the state healthcare pool could provide them with an opportunity to obtain healthcare insurance coverage.
Senate Republicans Unveil Government Reforms Initiative
A series of ten reforms to restructure and downsize state government were unveiled by Senate Republicans that they estimate could result in a potential savings of more than $2 billion. One of the key reform efforts is to require public employees to pay 20% of their healthcare premiums unless they establish a Health Savings Account and/or participate in wellness programs, which would reduce their healthcare premium to 15%. Public employees include all levels of government, schools, universities, and elected officials. Senate Republicans estimate that SBs 1046, 1047, and SJR P could save $610 million for all public employees, including $68.8 million from state employees.
The rationale for selecting the 20% threshold is based on private sector employees in Michigan and other Great Lakes states contributing 21% for single coverage and 27% for family coverage on average. Currently, public employees contribute on average 10% for single coverage and 15% for family coverage. These bills and the joint resolution have already received one committee hearing and are expected to be reported out of committee by month's end. Senate Majority Leader Michael Bishop's (R) ultimate goal is to have the legislation passed by the Chamber by month's end; however, he is still working on the necessary votes to pass the joint resolution.
House Democrats Continue to Work on Their Healthcare Pooling Plan
Several months ago, the House Committee on Public Employee Health Care Reform created sub-workgroups to work on House Bill 5345, described in a previous reform update , to address: (1) administrative cost efficiencies; (2) prescription drug purchasing; (3) plan elements and opt-out; (4) retiree plans; and (5) structure of the plan. The full committee recently met to hear a report from each workgroup on the status of their issue area. The workgroup reports were informal and do not contain analyses; however, there is pending legislation, in various forms of rough-draft stages, associated with two of the workgroups. Additionally, none of the sub-workgroups could provide a specific cost savings that would result from these reforms.
The workgroup tackling the issue of administrative costs is developing legislation that would require a dependent eligibility audit for all public employees, which would search employee contracts to make sure that claimed dependents are actually eligible to receive benefits. A second piece of legislation would require the performance of a reconciliation audit to evaluate employee contracts to ensure that an employee is not receiving duplicate benefits through coverage under another plan. Additionally, the workgroup focusing on prescription drug purchasing is developing legislation that would establish a statewide prescription drug benefit plan that would be mandatory for state employees and optional for local governments and school districts.
The workgroup addressing the structure of the plan had preliminary recommendations to: (1) expand the size of the Michigan Health Benefits Program Board from thirteen to twenty-nine members; (2) increase the number of public employee retirees represented on the board; (3) ensure greater accountability by having the interests represented nominate individuals from which the Governor would make his or her appointments; and (4) increasing the length of terms on the board from four to eight years.
Also mentioned during this committee hearing were concerns that the plan was unconstitutional. Of the five attorneys working on the issue with the workgroup, three of them believed it was unconstitutional, and two of them argued that it was constitutional. The workgroup leader stated that he thought the proposed legislation would be challenged in court if it is not changed.
The leader of the workgroup on plan design did not present a report because she wanted additional time to work on the issue. As a result of this hearing, the full committee plans to meet again in the future to hear another round of status reports from the workgroups.
Michigan Legislative Calendar
The Michigan Senate and House of Representatives will begin their spring break on Monday, March 29, 2010. Both chambers will reconvene on Tuesday, April 13, 2010.
*We would like to thank Cami M. Pendell, JD (BL Government Affairs LLC, Lansing, MI), for providing this email alert.