Michigan Senate Democrats are bringing back a plan they say would lower the health insurance costs in the state.
The plan would create a state-based health care exchange to replace Michigan’s membership in the federal platform, healthcare.gov.
State Senator Kevin Hertel (D-St. Clair Shores) estimated Michigan currently pays the federal government around $70 million annually to take part in it. He said the state could do an exchange for less money on its own.
“We would be able to keep that $70 million here in the State of Michigan, use it for all kinds of things to lower the cost of premiums within the individual market and that’s really what we’re aiming to do,” Hertel said during a press conference Thursday morning.
Hertel and other supporters of the legislation say insurance on the federal health care exchange has gotten too expensive for people anyway. Federal subsidies that kept costs lower under the Affordable Care Act expired last year and Congress has, so far, refused to extend them.
Generally, having fewer healthy people insured leads to higher overall plan costs. That’s because companies spend more on people with higher health care needs and pass those higher costs onto their members.
The pitch behind the state-based exchange is the state spending less money on a platform could mean it charges lower fees to be on it. Meanwhile, some of the fees that do get collected, instead of going to the federal government, could go into a pot of money to help insurers pay for their most expensive customers.
Brian Mills is with the Michigan Association of Health Plans.
“They create the state-based exchange, they set either the same or lower user fee, then they use the revenue from those user fees to put into a reinsurance pool, that helps lower the cost of premiums,” Mills said in an interview.
During Thursday’s press conference, some lawmakers floated finding a way to create Michigan’s own version of health insurance subsidies.
Mills agrees with that approach.
“If they were to create a state-based exchange and realize some cost savings, where do you want to put those cost savings and those revenues and those dollars? Do you want to put it in reinsurance, or even as [Hertel] suggested, maybe you look at your own state tax credits for health insurance premiums,” Mills said.
As far as getting things started, lawmakers say the state could find the money to get things going. State Senator Sylvia Santana (D-Detroit) chairs the state budget subcommittee that deals with public health spending.
“I think it makes the most sense, especially as far as the risk pool goes, and obviously having more people who will actually be a part of the state based exchange, which we’ve seen the decline at the federal level,” Santana said.
Lawmakers tried creating a state-based exchange last legislative term as well. Bills passed in the state Senate but never made it out of the Michigan House of Representatives, despite that chamber also being Democratic-led at the time.
They mainly faced opposition from Republicans who worried about growing the scope of Michigan government, the state taking on extra responsibilities from the federal government, and that savings wouldn’t actually come.
Senate Majority Leader Winnie Brinks (D-Grand Rapids) said she’s not deterred this year, now that Republicans run the Michigan House.
“This should not be up for debate. It’s not partisan, it’s a no brainer, clear help for people in our communities that we serve, and they should also be accountable to over in the House,” Brinks said.
The Senate has also taken steps like passing bills to create a prescription drug affordability board and expand participation in a federal program meant to support hospitals in underserved areas.
The Senate packages have not yet passed in the House after Republicans expressed doubts about whether they’d lead to real savings or accountability measures in the programs.
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