- Associated Press - Thursday, October 27, 2016

LANSING, Mich. (AP) - Gov. Rick Snyder vetoed business-backed legislation Thursday that would have changed Medicaid taxes, the latest twist in wrangling even among Republicans over how to help fund the government health insurance program.

The Republican governor’s move came a week after the GOP-led Senate voted overwhelmingly in support of bills that would have continued a 6 percent “use” tax on Medicaid managed care organizations, expedite the end of a health insurance tax disliked by the business lobby and change the pot of money the state uses to draw federal matching dollars.

Snyder questioned eliminating the health insurance claims tax at the end of 2018 instead of mid-2020 regardless of any potential action by the U.S. government.

“I am also very concerned that the federal government would not recognize this tax structure as an eligible Medicaid matching fund source, putting at risk federal funding for critical state programs and putting our state budget out of balance,” he wrote to senators, adding that he looked forward to continued discussions.

The Snyder administration opposed the four bills during the legislative debate, but lawmakers sent them to his desk anyway. The legislation was designed to address federal concerns that Medicaid taxation in Michigan and three other states is too narrowly tailored.

A spokeswoman for Senate Majority Leader Arlan Meekhof of West Olive said he was disappointed by the veto. The Michigan Manufacturers Association also criticized the move.

“It is regrettable that Michiganders will continue to shoulder the weight of an anti-competitive health care tax. No doubt they will be under the threat of a greater tax burden in the absence of any feasible alternative plan to address Michigan’s Medicaid funding problems,” said Delaney McKinley, director of human resource policy and membership development.

In March, Snyder signed a law extending the health insurance tax into 2020 and, starting in 2017, increasing it from 0.75 percent to 1 percent. The Michigan Chamber of Commerce called it a “giant tax hike.” Due to guidance from federal officials, his administration has made it clear that it will no longer collect the use tax from Medicaid managed care plans next year, according to the nonpartisan Senate Fiscal Agency.

The agency says if Snyder had signed the plan and the federal government disapproved it, the state would have brought in $256 million less in the 2018-19 fiscal year and $261 million less in 2019-20. If the proposal had been blessed by Snyder and federal officials, the school fund would have grown by up to $220 million annually while the general fund would have declined by up to $90 million.

Michigan has 2.4 million people enrolled in traditional Medicaid or the expansion program authorized under the federal health care law.

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Follow David Eggert on Twitter at https://twitter.com/DavidEggert00 . His work can be found at https://bigstory.ap.org/author/david-eggert


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