LANSING – The Michigan Senate on Wednesday passed and the Michigan House concurred in changes made to a bill that would extend the Health Insurance Claims Assessment through 2020 in a significant move to shore up the General Fund and especially Medicaid funding.

The only change to HB 5105 was the date change of 2020 instead of 2025 as the House had originally proposed. The HICA, a 1 percent tax on all health insurance claims, is scheduled to expire in 2017.

The HICA tax was created in 2011 to serve as a new mechanism allowing the state to fully draw all available federal matching funds for Medicaid.

Business groups have hated it and had denounced the legislation to extend it.

The bill is seen as a way to minimize a hit to the General Fund as the federal government has said the state will no longer be able to assess the use tax on Medicaid HMOs as it had been, and it was largely that point to which Senate Majority Leader Arlan Meekhof (R-West Olive) stuck in defending his chamber’s 21-17 vote on the bill.

“It’s important to look at a long-term solution and this, we believe, gives us the opportunity to do that. A number of folks have stepped forward to find that solution and we’ll hopefully do that,” he told reporters after session.

Asked if he thought it was a tax increase, as has been characterized by opponents like the Michigan Chamber of Commerce, Mr. Meekhof said, “It’s been this way for a while and we’ve gone to the use tax, gone to this, gone to that. We just haven’t found the right thing … so I don’t think it’s an increase.”

Senate Minority Leader Jim Ananich (D-Flint) disagreed, and he said that was why his caucus – except for Sen. Virgil Smith (D-Detroit) – voted in opposition to the bill with Sen. Patrick Colbeck (R-Canton Township), Sen. Judy Emmons (R-Sheridan), Sen. Joe Hune (R-Whitmore Lake), Sen. Margaret O’Brien (R-Portage), Sen. Phil Pavlov (R-St. Clair), Sen. Tory Rocca (R-Sterling Heights) and Sen. Tonya Schuitmaker (R-Lawton).

“We wanted a full and complete fix,” Ananich said. “I want to make sure we have thoughtful, reasoned policy, and I didn’t think this was a good plan to only do a sunset renewal for three years, and my caucus felt the same way.”

On the House side, 10 Democrats and 15 Republicans voted no on the bill. The House voted 77-25 to concur in the Senate’s changes.

Ananich pointed to his speech last July 1, when the Senate passed its road funding plan (See Gongwer Michigan Report, July 1, 2015), in which he said the roads proposal would not be the last time the chamber voted for a tax increase, and he alleged that was exactly what happened Wednesday.

“They knew it was going to be a failed experiment when they passed it. They knew they were going to have to come back and raise taxes. They didn’t want to do it then because they didn’t want to keep taking tax vote after tax vote, they wanted to spread it out so people didn’t notice,” he said. “I think the citizens of Michigan are smarter than that, and I know our colleagues are, so that’s why we voted no.”

As to addressing the General Fund budget hole no HICA revenue would create, Ananich said the state has a $1 billion surplus and that “there’s other ways to fund HICA.”

“We’ve already voted on HICA three or four times now. The numbers have been wrong every time,” he said. “Let’s get a real estimate on how much we need to fund our health care system and make sure that’s what we pass. But doing it to backfill a bad roads plan just didn’t make any sense to us.”

Colbeck also chided the vote by the chamber in his no-vote explanation on the floor.

“Instead of looking at ways to actually reduce the expenses to our taxpayers and make sure there are ways to provide better quality services to our constituents, we’re going off and looking at increasing taxes,” he said. “I’m just concerned this is a repeated pattern where we do not look at ways of delivering the services we’d like to provide to our constituents in more efficient ways. Instead we just go back in and start taxing, and for me, it’s personally disappointing.”

The bill now goes to Governor Rick Snyder‘s desk for his signature.

This story was published in Gongwer News Service. To subscribe, click on www.gongwer.com