Community Health Budget Invests in Healthy Workforce

 

For a state to prosper, it must have healthy residents. For individuals to prosper, they must be healthy and have access to the healthcare services they need. The Department of Community Health budget for the year that begins Oct. 1 provides substantial investments to achieve a healthy population and healthy workforce.

The budget includes full-year funding for the Healthy Michigan Plan (Michigan’s Medicaid expansion program), continues expansion of Healthy Kids Dental to Kalamazoo and Macomb counties, continues half of the primary care provider rate increase implemented in 2013, includes funds to begin implementation of the Mental Health and Wellness Commission recommendations, restores funding for senior meals and services, increases Medicaid obstetric payments for both the doctors and some hospitals and expands Medicaid coverage of breast pumps. The budget also funds a number of initiatives or pilot programs to improve the health and health outcomes of Michigan residents.

Potential funding shortfalls for Medicaid health plan services, as well as public mental health services, were identified during the budget process. A reserve fund for managed care plan services was included in the final budget to cover new costs health plans will be responsible for under the Affordable Care Act. No additional funding was included in the final budget for non-Medicaid mental health services as the Senate-recommended additional funding of $4.8 million was ultimately rejected.

The controversy about adequacy of funding to maintain the same level of services for non-Medicaid eligible recipients continues. A Senate Fiscal Agency memorandum, released on June 19 concludes: “There are legitimate reasons to be concerned whether FY 2014-15 funding for CMH non-Medicaid services is sufficient to maintain services at the same level as in prior years.” This issue must be resolved to ensure services and programs are not reduced or eliminated for those fragile and vulnerable populations who depend on them.

The Health Insurance Claims tax shortfall of $110 million was resolved in the final budget through the restoration of the previous use tax on Medicaid managed care organizations rather than by adding state General Funds. The claims tax shortfall has created a funding problem in each of the last three fiscal years.

Of concern is the practice of taking ongoing program funding and reclassifying it as “one-time” funding as has been done with graduate medical education and several other programs over the last few years, making program planning and administration very difficult. Long-term success, requires long-term investments.

The Community Health budget is the state’s largest, growing by over 72% between Fiscal Years 2006 and 2015. Of note, the state General Fund investment has only increased 9% over the Fiscal Year 2006 appropriation. This year, federal funds make up nearly 70% of the budget. The bulk of the total funding, nearly three-fourths, is for the state’s Medicaid and Healthy Michigan Plan programs.

Medicaid

Approximately one in every five Michigan residents is enrolled in Medicaid for their healthcare coverage, and more than half of all births in the state are paid for by the program. In each of the last three years, half of the children in the state have been covered by Medicaid as child poverty in Michigan continues to increase.

In the current fiscal year, the governor projects that 1.82 million Michigan residents will be covered by Medicaid, and recently set a target of enrolling 322,000 individuals in the Healthy Michigan Plan that opened for enrollment on April 1. Program enrollment is off to a great start with more than 315,000 individuals enrolled as of June 30, 2014.

Governor’s Budget:

  • Provides full-year funding of $2.2 billion, all federal funds, for the Healthy Michigan Plan, along with 36 new positions to administer the program. The Healthy Michigan Plan, championed by Gov. Snyder, provides comprehensive healthcare coverage to individuals with incomes up to 133% of the federal poverty level ($15,521 for an individual, $31,721 for a family of four).
  • Recognizes state General Fund savings of over $243 million as a result of Michigan’s implementation of the Healthy Michigan Plan. The savings are realized because the state previously spent 100% state funds for limited services to very low-income uninsured individuals, and with the expansion, federal funds will be available to pay for services for this population. The governor recommends that half of the savings, or $122 million, be placed in a newly created Health Savings Fund that would ensure that the state has sufficient funds to cover future reductions in federal matching funds. Healthy Michigan Plan funding is 100% federal for calendar years 2014, 2015, and 2016. The federal funding declines during calendar years 2017- 2019, reaching 90% in 2020, where it remains.
  • Includes $25.2 million for autism services, down from $35.2 million in the current year. The funding reduction is not a program reduction, but reflects a slow start-up for the program due to the need to develop provider capacity. To increase needed capacity, $3 million in continuing “one-time” funding– increased from $2 million in the current fiscal year–is recommended to train autism services providers through the creation of university autism centers. In Fiscal Year 2014, grants of $500,000 each are allocated to Eastern Michigan, Western Michigan, Central Michigan and Oakland universities. The Fiscal Year 2015 recommendation allocates $1 million each to Eastern Michigan, Western Michigan and Michigan State universities.
  • Recommends $26 million in state funds, bringing in $49.4 million in federal funds, to continue approximately half of the rate increase for primary care providers. This rate increase, which brings Medicaid rates up to Medicare levels, is required by federal law in calendar years 2013 and 2014, and is 100% federally funded. In calendar year 2015, the rate increase is no longer required or 100% federally funded, so a state investment is required to continue.
  • Eliminates $35.6 million in special payments for rural and sole community hospitals, saving $12 million in state General Fund. These funds were classified as “one-time” funding in Fiscal Year 2012, but converted to ongoing funding for Fiscal Years 2013 and 2014.

House:

  • Concurs with the governor’s recommendation for full-year funding for the Healthy Michigan Fund, as well as the additional staff to administer the program, but creates a separate staffing line-item.
  • Concurs with the governor on state General Fund savings of over $243 million as a result of implementation of the Healthy Michigan Plan.
  • Concurs with the $10 million budget reduction in autism services, but does not concur with the recommended increase in university training funds. The House reduces the training funding from $2 million to $1.5 million in “one-time” grants, and specifies $500,000 in continuing grants to Eastern and Western Michigan universities and adds $500,000 for Michigan State University.
  • Concurs with continuing a portion of the primary care provider rate increase, but recommends a lower level of funding — $21.4 million in state funds and $40.7 million in federal funds.
  • Rejects the Executive recommendation to eliminate special payments to rural and sole community hospitals, and recommends continuation funding with a new mix of funds, including provider taxes and federal funds—maintaining the state General Fund savings proposed by the governor.

Senate:

  • Concurs with the governor and the House on full-year funding and additional staffing, in a new line-item, for the Healthy Michigan Plan.
  • Concurs with the governor and the House on state General Fund savings of over $243 million from implementation of the Healthy Michigan Plan.
  • Concurs with the $10 million budget reduction in autism services, and recommends that $4 million from the Autism Coverage Fund be used to replace $4 million in General Fund. This would require a law change. The Senate also recommends increases rather than reductions in university training funds. The Senate restores funding of $500,000 each to Central Michigan and Oakland universities, concurs with the governor on the $1 million grants each to Eastern Michigan, Western Michigan and Michigan State universities, and adds $1.5 million for “autism navigators” to assist families in choosing treatment and services.
  • Concurs with the governor on the primary care provider rate increase.
  • Rejects the Executive recommendation to eliminate special payments for rural and sole community hospitals, and recommends continuation with the current financing of state and federal funds.

Final Budget:

  • Includes full-year funding, all federal funds, for the Healthy Michigan Plan as well as 36 new positions to administer the program.
  • Includes state General Fund savings of $232 million in recognition of previously state-funded services provided to newly eligible Healthy Michigan Plan enrollees that will be covered by the federal government. The governor recommended that half of the savings be deposited in a healthcare savings account to be used in future years when the state must contribute a small percentage of the cost of the Healthy Michigan Plan. Due to the reduced May 2014 revenue projections, that deposit will not be made.
  • Includes $25.2 million for autism services, a reduction of $10 million in recognition of the slow start-up of the program and the need to develop provider capacity. This is not a program reduction. In addition, $5.5 million in new funding from the Autism Coverage Fund is added to $3 million in state General Funds ($1 million new funds) to provide grants for university autism centers to provide research, education and training, as well as a new support program for families. University grants include: $4 million to Western Michigan University Autism Center for Excellence, $1 million each to Michigan State and Eastern Michigan Universities, $500,000 each to Central Michigan and Oakland Universities. The $1.5 million family support program will assist families in choosing service and treatment options. The new funding is designated as one-time funding.
  • Includes funding to continue about half of the primary care rate increase implemented in calendar year 2013. A state investment of $25 million is included to continue a portion of this key provider rate increase.
  • Continues $35.6 million for special payments for rural and sole community hospitals.
  • Provides an increase in obstetrical service payments to physicians ($4.8 million in state funds, $9 million in federal funds) and to qualifying rural hospitals ($3.8 million in state funds, $7.2 million in federal funds). Over the last several years, many hospitals have closed their obstetrical units due to low Medicaid reimbursement, leaving many communities without obstetrical services.
  • Includes funding of $1.7 million in state funds, $3.3 million in federal funds to recognize the impact of the recently passed minimum wage increase on the Adult Home Help program.
  • Provides a 6% rate increase for adult foster care personal care services.
  • Transfers $4.3 million in Graduate Medical Education funding from one-time back to ongoing funding.
  • Does not include Senate-recommended restoration of funding for the Harper/Hutzel Hospital’s special payment. The hospital operates an infant mortality program with the National Institutes of Health, and has indicated it would maintain the current focus on improving the health status of women and children.

Healthy Kids Dental

Michigan currently provides enhanced dental services to more than 500,000 children in 78 counties. Access to dental services is essential to prevent tooth decay, the NO. 1 chronic disease in children. Healthy Kids Dental improves access to care by partnering with Delta Dental of Michigan to increase provider reimbursement rates and simplify administration. With Michigan’s dismal ranking in the Race for Results for African American children, expanding Healthy Kids Dental to the remaining counties presents a tremendous public policy opportunity.

Governor’s Budget:

  • Includes $5.4 million in state General Fund and $10.3 million in federal funds to expand the Healthy Kids Dental program to an additional 100,000 children in Kalamazoo and Macomb counties. With that expansion, the program would cover over 611,000 children in 80 of 83 Michigan counties. Not yet covered are more than 400,000 children in three of the most populated Michigan counties that are the home to many low-income children and children of color, including Wayne, Oakland and Kent counties.

House:

  • Concurs with the governor and makes no recommendation to expand Healthy Kids Dental to the remaining counties.

Senate:

  • Concurs with the governor and the House on Healthy Kids Dental funding and makes no recommendation to expand the program to the remaining counties.

Final Budget:

  • Includes $15.7 million recommended by the governor to expand Healthy Kids Dental to Kalamazoo and Macomb counties, covering an additional 100,000 children. However, more than 400,000 low-income children in Wayne, Kent and Oakland counties are left behind, nearly 40% of the eligible children.

Mental Health and Substance Abuse Services

Since Fiscal Year 2005, Medicaid-related mental health spending has increased by over 50%, while non-Medicaid spending has decreased, leaving thousands of residents without needed services. Funding for substance use disorder services increased by 12%, largely because of increases in federal funding, but fewer individuals were served in Fiscal Year 2013 than in the previous 9 years, despite the growing problem with heroin and other opiate addictions.

Governor’s Budget:

  • Supports the Healthy Michigan Plan, and with the expansion of Medicaid eligibility, enrolled individuals will also have access to comprehensive mental health and substance use disorder services. Again, great concern has been raised about the adequacy of the funding to provide the promised services.
  • Recommends $15.6 million in state General Fund, $5 million of which is “one-time” funding, to begin implementation of the recommendations of the Mental Health and Wellness Commission, which released its recommendations for improvements in mental health services in January 2014.
  • Recommends $3.4 million in state General Fund for the Mental Health Diversion Council to treat those with mental illness or developmental disabilities in settings other than the criminal justice system. Additional funding of $2.7 million is included in the Judiciary and Corrections budgets.

House:

  • Concurs with the Executive recommendation to expand mental health and substance use disorder services through the Healthy Michigan Plan.
  • Concurs with the governor on $15.6 million in state funding to implement Mental Health and Wellness Commission recommendations, and also adds potential federal funding (yet to be identified), to increase programming capacity by $22 million.
  • Concurs with the governor and adds $3.4 million in state General Fund for the Mental Health Diversion Council.

Senate:

  • Concurs with the governor and the House on expansion of services through the Healthy Michigan Plan, and also adds $4.8 million General Fund for community mental health non-Medicaid services.
  • Adds $100 placeholders for additional legislative discussions on expanded funding to implement the recommendations of the Mental Health and Wellness Commission.
  • Includes a $100 placeholder for additional funding for the Mental Health Diversion Council.

Final Budget:

  • Includes federal funding to cover mental health and substance use disorder services for the newly eligible Healthy Michigan Plan enrollees. Savings associated with the implementation of Healthy Michigan Plan were reduced $16 million in recognition of lower projected mental health savings. However, as mentioned above, there has been considerable controversy about the adequacy of remaining state funding to maintain the same level of services for non-Medicaid eligible individuals, and services not funded by the Medicaid program. State funds for non-Medicaid/Healthy Michigan Plan services were reduced by two-thirds.
  • Includes $14.3 million in state funds and $22.2 million in federal funds to begin implementing the recommendations of the Mental Health and Wellness Commission. Of the appropriated amounts, $5 million of the state funds and $4 million of the federal funds are classified as one-time funds.
  • Includes $3.4 million to implement recommendations of the Mental Health Diversion Council to treat those with mental illness or developmental disabilities in settings other than the criminal justice system.

 Public Health and Children’s Services

Nearly two of every three dollars spent on public health services is federal. Over the last decade, nearly all increases in total public health funding have been from federal grants or other sources, while state funding has remained essentially flat.

Governor’s Budget:

  • Recommends continuation funding of $39.4 million for local public health services. Appropriations for local public health essential services, while increased by $2 million in Fiscal Year 2014, remain below the Fiscal Year 2005 appropriation.
  • Includes $2.5 million in state funds to conduct a regional needs assessment and expand home visiting services to at-risk families with young children in rural areas in the Upper Peninsula and Northern Lower Peninsula.
  • Includes $2 million in “one-time” state funding for a pilot program to improve child and adolescent health services by working with two existing school-based clinics to identify satellite locations that will be serviced by mobile teams, increasing access to nursing and behavioral health services in schools.
  • Increases the essential health provider program by $600,000 to reflect projected additional private revenue. This program assists primary care providers who practice in medically underserved areas with the repayment of their educational loans.

House:

  • Provides a $1.5 million state General Fund increase for local public health services, bringing total funding to the level of the Fiscal Year 2005 appropriation.
  • Concurs with the governor by adding $2.5 million for home visiting services in rural areas, but funds the expansion with federal (TANF) funds, rather than state funds.
  • Concurs with the governor on adding $2 million for a child and adolescent health services pilot program, but funds with federal (TANF) funds, rather than state funds.
  • Concurs with the governor by increasing the essential health provider program by $600,000.

Senate:

  • Includes a $100 placeholder for discussion of the House-recommended expansion of funding for local public health services.
  • Concurs with the House by adding $2.5 million in federal TANF funds for home visiting services in rural areas, and also adds a $100 placeholder for a potential funding increase for evidence-based home visiting.
  • Concurs with the House by adding $2 million in federal TANF funds for a child and adolescent health services pilot program.
  • Concurs with the governor and House, adding $600,000 in private funds for the essential health provider program, and also adds $500,000 in state General Fund.

Final Budget:

  • Includes $1.5 million in state funds to bring total funding for local public health operations back to the level of the FY2005 appropriation.
  • Includes $2.25 million in state funds to expand home visiting programs in northern Michigan and the Upper Peninsula to pregnant women and families with children up to age 5. A regional needs assessment will identify sites and potential participants.
  • Includes $1.5 million to test a new financing tool for certain services in limited target areas. Known as Social Impact Bonds, but referred to as Pay for Success Contracts in the Community Health budget, the goal is to deliver needed services in an innovative manner that improves outcomes and reduces government costs. Non-governmental organizations provide up-front funding and assume the risk for programs that are developed and delivered by non-profit organizations.. Government payments are then made only when performance measures are achieved and savings are documented. The Fiscal Year 2015 pilot projects will focus on home visiting programs for mothers and infants, and community supports in high risk neighborhoods.
  • Includes $100,000 state General Fund to increase the Pregnancy and Parenting Support Program to $800,000.
  • Includes $150,000 state General Fund to increase diabetes prevention funding to $800,000.
  • Includes $150,000 state General Fund to establish a pilot program to provide more comprehensive services and supports to individuals with Alzheimer’s disease to enable them to remain in their homes as long as possible, delaying potential moves to long term care facilities.
  • Includes $100,000 state General Fund to increase the Pregnancy and Parenting Support Program to $800,000.
  • Includes $150,000 state General Fund to increase diabetes prevention funding to $800,000.
  • Includes $150,000 state General Fund to establish a pilot program to provide more comprehensive services and supports to individuals with Alzheimer’s disease to enable them to remain in their homes as long as possible, delaying potential moves to long term care facilities.
  • Includes $2 million, classified as one-time funds, for a pilot project to increase child and adolescent access to nursing and behavioral health services using two existing school clinics as hubs with mobile health teams serving satellite locations.
  • Includes $1.1 million in new funding for the essential health provider program. About half of the funding is state General Fund, the remainder is private funds.
  • Includes $200,000 in state funds to support efforts to combat human trafficking in Michigan.
  • Includes $500,000 in additional funding to create more healthy homes through lead abatement.
  • Includes $500,000 for breast cancer screening and services. These funds represent a partial restoration of the prior Health and Wellness funded services. All funds for “cancer prevention and control” services from the Health and Wellness fund were eliminated in the current fiscal year.

Services for the Aging

Governor’s Budget:

  • Includes $5 million in state funds to help eliminate the waiting list of an estimated 4,500 seniors eligible for home-delivered meals ($1.8 million) and in-home services ($3.2 million) provided through Area Agencies on Aging around the state. With this increase in home-delivered meals, the reductions in funding over the last decade have been completely restored.
  • Expands funding by $9 million in state funds, $17.2 million in federal funds, to eliminate the waiting list for the MIChoice program that provides in-home and community services to help seniors or those with disabilities remain in their homes rather than moving to nursing homes, serving an additional 1,250 individuals.
  • Recommends the expansion of PACE (Programs for All-Inclusive Care for the Elderly) to more counties, expanding sites to Flint, Lansing, and Saginaw, with funding from corresponding savings in nursing home costs.

House:

  • Concurs with the governor, adding $5 million for home-delivered meals and in-home services for seniors.
  • Concurs with the governor by expanding the MIChoice program by $9 million in state funds and $17.2 million in federal funds.
  • Concurs with the governor on the expansion of the PACE program.

Senate:

  • Concurs with the governor and House, adding $5 million for home-delivered meals and in-home services for seniors.
  • Concurs with the governor and House by expanding the MIChoice program by $9 million in state funds and $17.2 million in federal funds.
  • Concurs with the governor and House on the expansion of the PACE program.

Final Budget:

  • Includes $5 million for home-delivered meals and in-home services for seniors.
  • Expands the MIChoice program to eliminate waiting lists and allow seniors and those with disabilities to remain in their own homes or the community rather than moving to nursing homes by adding $9 million in state funds and $17.2 million in federal funds.
  • Expands PACE (Program for All-Inclusive Care for the Elderly) to Flint, Lansing, and Saginaw, and Muskegon funded by projected savings from reduced nursing home utilization.