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MI tax on health claims would raise rates

The Detroit News, June 22, 2011

A proposed new state tax on healthcare claims that would help fund medical care for low-income residents promises to cost some insurers and employers millions of dollars a year and lead to higher insurance premiums for consumers. The proposal also pits manufacturers against hospitals over its effect on employment and benefits. Manufacturers say the tax would halt new hiring or reduce employee benefits, while hospitals say they could lose workers if the tax is defeated and state Medicaid funding is cut. The 2012 state budget that Gov. Rick Snyder signed Tuesday relies on the passage of a 1% claims tax to fund Medicaid, a government program that provides health care to nearly 1.9 million poor Michiganians. It would replace a 6% use tax that state Medicaid health maintenance organizations now pay but is endangered because the federal government is considering disallowing its use for federal matching funds. The current tax is not passed along to consumers. The proposed tax would shift who pays about $400 million generated for Medicaid from 14 Medicaid health plans to every health insurer and self-funded employer plan, according to the bills introduced by state Sen. Roger Kahn, R-Saginaw Township.