An Accountable and Cost-Effective System of Care

This is the final post in the series that offers ideas to help Michigan address a looming fiscal cliff caused by the end of certain revenue devices that have funded Medicaid and other low-income health care programs as well as likely unavoidable increases in cost. This post looks at ways to provide the revenues needed without exposing all taxpayers to these costs.

Explore all options to exploit the existing HICA and Use Tax provisions to leverage federal match as long as possible. HICA – a tax on health insurance claims – affects any company that provides health insurance programs in the state, whether through an insurer or through a self-insurance mechanism. The Use Tax has been paid by many providers and health insurers over the years, helping pay for services these industries provide.

While we can see that the inevitable repeal of these taxes will take place over the next two years, we also see examples of leaving revenue on the table.  Easing the transition over the next few years is too important to ignore these options while these exist.

Meanwhile, state policymakers should use due diligence, including political and administrative feasibility to determine if other potential provider tax mechanisms are possible to offset the future loss of HICA and Use Tax revenue.

Require gain sharing with the state for special financing programs.  Currently the revenue associated with the program rewarding providers affiliated with the state’s medical schools is retained by the medical schools’ “Special Needs Access Program” or SNAP.  The administration and the Legislature should explore options to assure a similar state policy is implemented for SNAP.

Several programs are successfully funded through the use of school aid dollars that serve as the state match for federal funds.  There is a belief that additional school aid resources could be made available as match for federal dollars to fund programs that are intended to serve school age children and in school based settings.  This should be explored further, particularly if 100 percent general fund is used for current support.

 

These suggestions are made not because they are easy, but because they will continue to drive the state efforts toward a more accountable system of care that enables a focus on appropriate service, outcomes and cost-effectiveness.