State Legislature
6:29 am
Thu June 30, 2011

Senate fails to approve Medicaid funding measure

The federal government is expected to rule soon that Michigan’s system for funding Medicaid is illegal. That would put more than a billion dollars in federal funds and the state’s balanced budget at risk unless the Legislature adopts another plan to come up with that money.

Governor Rick Snyder has been pressuring the Legislature to adopt a one percent tax on all health insurance claims. That would put Michigan in compliance with federal rules. Otherwise, Michigan could lose 10 percent of its funding for the entire Medicaid program.

The claims tax would generate $400 million, and qualify the state for twice that much in federal funds.

The governor says the state’s balanced budget for the coming fiscal year is at stake, as well his promise not to cut Medicaid services for the poor as Michigan is just beginning to emerge from a long recession.

“I think it’s a good thing to do to ensure we balance our budget and we have good Medicaid in our state.”

But support among lawmakers for a new tax has been elusive. The measure failed when state Senate leaders put it up for a test vote.