LANSING – After a two-month battle, the Michigan Senate finally put together the support needed to the proposed 1 percent health insurance claims tax that is essential to providing the funding to support the spending allocated for Medicaid.

Democrats still seemed reticent to support the proposal after putting up almost no support for a companion bill Wednesday whose failure to pass led to postponing action on the issue. As the one-minute voting clock counted down past 10 seconds, the bill was still a couple votes short of passage. Then just before time expired, seven Democrats quickly put up “yes” votes and the bill (SB 348 ) passed 26-9.

“These dollars are keeping the Medicaid program in this state whole,” said Sen. Bruce Caswell (R-Hillsdale). “This assessment is a vital piece of maintaining the provider rates for next year which we all agreed to when we passed the budget … We must protect these dollars and make sure that they maintain the access that we have for our 1.9 million Medicaid citizens.”

Now the issue shifts to the House where the bill’s critics, primarily the Michigan Manufacturers Association, will continue to try to win changes designed to restrict revenue growth from the tax beyond the measures already in the legislation. The bill would raise $1.2 billion, $400 million from the tax and $800 million from the resulting federal matching funds.

House Speaker Jase Bolger (R-Marshall) did not give a timeline from when the chamber may act on the claims tax, but noted its importance to balancing the 2011-12 budget.

“It’s time for us to dig into the issue,” he said.

Bolger said the House does have two days of session this summer, but members would be in at that time only if they are needed. He said leadership is not building agendas for those days.

The Michigan State Medical Society hailed the Senate action, which is key to preserving existing Medicaid reimbursement rates to physicians.

“Today’s passage of Senate Bill 348 underscores the fact that Michigan citizens’ health is a critical component in the physical and economic recovery of our state,” MSMS President Steven Newman said in a statement. “The Senate recognized the need to preserve and protect health care access to primary care as more people lose or can no longer afford their health insurance.”

Joining 19 Republicans in support were Sen. Glenn Anderson (D-Westland), Sen. Vincent Gregory (D-Southfield), Sen. Morris Hood III (D-Detroit), Sen. Hoon-Yung Hopgood (D-Taylor), Senate Minority Floor Leader Tupac Hunter (D-Detroit), Sen. Virgil Smith (D-Detroit) and Sen. Rebekah Warren (D-Ann Arbor).

Two Democrats – Sen. Steve Bieda of Warren and Sen. John Gleason of Flushing – voted “no.” Seven Republicans also opposed the bill: Sen. Jack Brandenburg of Harrison Township, Sen. Patrick Colbeck of Canton Township, Sen. Joe Hune of Hamburg, Sen. Rick Jones of Grand Ledge, Sen. Mike Nofs of Battle Creek, Sen. Tory Rocca of Sterling Heights and Sen. Tonya Schuitmaker of Lawton.

Three Democrats abstained: Sen. Bert Johnson of Highland Park, Senate Minority Leader Gretchen Whitmer of East Lansing and Sen. Coleman Young II of Detroit.

Democrats kept trying to needle the GOP for approving a new tax. While it would replace an existing levy – the 6 percent tax on claims processed by the state’s Medicaid health maintenance organizations – it will apply much, much more broadly and to every insurance claim in the state. Insurers and companies that self-insure will have to decide whether to eat the new expense or pass it along to consumers.

Hunter went so far as to offer an amendment that would have renamed the law the Health Insurance Claims Tax Act instead of the Health Insurance Claims Assessment Act.

“We’re passing a tax increase,” he said. “You should stand up today, be proud of what it is you’re doing.”

But Sen. Roger Kahn (R-Saginaw Township), after smiling a bit during Mr. Hunter’s remarks, said of the amendment, “This is at best gamesmanship and should be defeated.”

Three Republicans – Brandenburg, Hune and Rocca – joined with Democrats in support of the amendment, but it still fell short.

There would be a handful of exemptions: those under Medicare, the U.S. Veterans Administration, federal employee health benefits and Medicaid fee-for-service payments as well as health claims filed through auto insurers and worker’s compensation insurance.

In total, the Senate Fiscal Agency estimates that 54 percent of the $81 billion in total health claims for the year would be exempt. There was an interesting remark in the SFA’s analysis of the bill.

“The SFA is … not comfortable stating ‘the assessment base is definitely $37.5 billion; therefore a 1.0 percent assessment would raise almost exactly $375.0 million in 2012.’ There is significant potential variance in the assessment base estimate and it could prove to be higher or lower by several billion dollars, thus affecting the revenue estimate by tens of millions,” analysts wrote. “On the other hand, the $375.0 million figure does represent the SFA’s most informed estimate of the actual revenue.”

Commercial insurers that have less than $18 million in capital and claims – there are only three – would instead pay a 0.1 percent tax.

If the amount collected in 2012 exceeds $400 million, then the rate for 2013 will drop to whatever rate would have raised $400 million in 2012.

Additionally, if the tax collected more than 110 percent of $400.0 million (adjusted for future years by the medical inflation rate), the rate would drop to collect no more than 103 percent of $400.0 million (again adjusted by the medical inflation rate).

INCOME TAX CHECK-OFFS: Bills that would allow taxpayers to devote part of their income tax refund to the Michigan Alzheimer’s Association Fund (SB 324 , SB 325 ) unanimously passed.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

a>>