Michigan State House May Vote on Bill to Reduce FY 2003 Budget For Department of Community Health

The Michigan House on Sept. 20 may vote on "controversial" legislation that would reduce by 5% FY 2003 budgets of three state agencies, including the state Department of Community Health, which administers the state's Medicaid program, the Detroit Free Press reports. The bill would mark the "first time" that the state Legislature has approved budgets for the Family Independence Agency, the Department of Community Health and the Department of Corrections two years in advance. According to Spencer Johnson, president of the Michigan Health & Hospital Association, the "political and reckless and unfair" legislation would reduce Medicaid payments to state hospitals, doctors, long term care facilities and MCOs by $280 million. Johnson said that the hospital industry would lose $37 million in Medicaid reimbursements and "untold millions more" from Medicaid HMOs, which reimburse hospitals for services provided to members. Doctors would lose $7 million in Medicaid payments and more from reduced HMO reimbursements, the Free Press reports. Kenneth Musson, president of the Michigan State Medical Society, said that the bill would likely prompt many doctors to stop treating Medicaid beneficiaries. The Free Press reports that the legislation would "hit hardest" providers in urban and rural areas, where most Medicaid beneficiaries reside.

Partisan Bill?
According to Gov. John Engler (R), the bill would "make planning easier during lean years," and some state House Republicans said that the legislation would "depoliticize what likely will be tough fiscal decisions" in 2002, when many state lawmakers will face re-election campaigns. Kelly Chesney, a spokesperson for the Michigan Office of the State Budget, said that the state has a $550 million deficit in FY 2001 and will face an estimated $514 million shortfall in FY 2002. Michigan has a $38 billion budget this year. The state Department of Community Health has an $8.6 billion budget, including about $5.2 billion for the state's Medicaid program. However, some state House Democrats have warned that the "arbitrary" bill would represent a "hardship" for departments that "disproportionately" serve the state's children from low-income families, their parents, seniors and the disabled (Wendland-Bowyer/Norris, Detroit Free Press, 9/19).