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Lansing — Michigan’s Republican-led Senate is pressuring Gov. Rick Snyder to back sweeping changes to the state’s Medicaid health insurance system, including proposed work requirements and a tougher 48-month benefit limit for the Healthy Michigan plan.

The Senate on Thursday approved a $56.6 billion budget that would suspend salaries for Director Nick Lyon and other top officials in the Michigan Department of Health and Human Services if the Snyder administration does not request and secure a federal waiver to implement Medicaid work requirements.

The provision follows last month’s Senate approval of a controversial 29-hour weekly work mandate for able-bodied adults. The legislation is now before the House, and “we just want to send a message that it’s important for the administration to also take it seriously,” said Senate Appropriations Chairman Dave Hildenbrand, R-Lowell.

The budget includes a separate provision directing the state to end expanded eligibility for residents who earn between 100 percent and 133 percent of the federal poverty level after they’ve been on the Healthy Michigan plan for 48 months, eliminating an option to extend coverage by completing healthy behaviors.

Democratic Sen. Curtis Hertel of East Lansing called the budget language “severely unconstitutional,” arguing the executive branch is supposed to implement laws. The budget would diminish that role by threatening salary reductions “if they don’t interpret the laws the way we want,” Hertel said.

The salary penalties are unlikely to remain in the final 2019 budget that lawmakers will negotiate with Snyder. But they are the latest tactic in the Senate’s bid to reform Medicaid less than five years after agreeing to expand eligibility under the Affordable Care Act. Nearly 700,000 residents are now enrolled in the Healthy Michigan plan.

Under the budget, the state would withhold a combined $294,000 in salaries from “unclassified” employees in the state health department until a work requirement waiver is submitted. The state would withhold another $294,000 unless or until the federal government approves the waiver.

Current unclassified employees include Lyon, Senior Assistant Nancy Grijalva, Chief Medical Executive Eden Wells, senior communications deputy Geralyn Lasher and Cindy Kelly, a design coordinator at the state-operated Caro Center psychiatric hospital, department spokesman Bob Wheaton said.

“This issue is still being worked through,” Wheaton said of the Medicaid provisions.

Coverage limits

The Healthy Michigan law, as signed by Snyder in 2013, discouraged residents from staying on the plan for more than four years but gave them the option to continue coverage with higher cost-sharing payments that could be reduced through healthy behaviors.

The current federal waiver directs individuals to seek private insurance on the federal marketplace after 48 months on Medicaid, but it conflicts with state law by allowing the state to subsidize those premiums, said state Sen. Mike Shirkey, R-Clarklake.

“This is personal for me, because I laid a lot of political capital on the line to try to get this done,” said Shirkey, who coaxed fellow Republicans to support the Medicaid expansion in 2013 but is now leading the reform effort.

“I still believe it was the right thing to do, but I’m not going to go back on the promises that were made to get those votes.”

Senate Democrats opposed the Medicaid work requirement legislation, and Senate Minority Leader Jim Ananich said the salary penalties show the proposal “is becoming more and more of a political gimmick.”

“I thought it was wrong as a policy bill, and it’s wrong in the budget,” said Ananich, D-Flint. “I hope that the governor puts pressure on them by saying he’s not going to support this, but this scheme is just not well thought out.”

A Snyder spokesman previously called the Senate-approved Medicaid work mandate “neither a reasonable nor responsible change to the state’s social safety net.” But the governor has continued to negotiate potential changes with Shirkey ahead of potential voting in the House.

Able-bodied Medicaid enrollees could lose government health insurance if they fail to document at least 29 hours a week of work, job training or related education. Shirkey estimates about 300,000 Medicaid recipients would be subject to the Senate-approved work mandate, which includes exemptions for parents with children 6 or younger, pregnant women, disability caretakers and people recently released from prison or receiving unemployment benefits.

Ongoing negotiations

The proposal would also waive the work requirement for anyone who lives in a county with an unemployment rate of 8.5 percent or higher. Critics note the exemption would benefit rural parts of the state that might vote Republican but not urban cities like Detroit or Flint that have struggled with unemployment.

Shirkey dismissed the criticism, calling the exemption a compromise after an initial draft of the bill did not include any unemployment rate allowances.

“I don’t know why anybody in Flint would say we need to be treated separate than Genesee County,” Shirkey said. “I mean, is it too much of an expectation to look for jobs if you happen to live in Flint, to look for a job in Genesee County? And the same argument applies to Detroit and Wayne County. How granular do you want to get?”

But state Rep Fred Durhal III, D-Detroit, said low-income urban residents face travel obstacles to work in another part of the county.

“We have no regional transit system,” Durhal said. “If you live on the east side of Detroit and there are jobs available in Plymouth, how the hell are you supposed to get out there?”

House Democrats are proposing unemployment exemptions based on zip code. Durhal called the proposal that passed the Senate “discriminatory in nature.” Democrats want to encourage people to work, he said, but “this seems like it’s an attack on folks and trying to take health care away from folks.”

Shirkey said he met with the Snyder administration last week to discuss the work requirements and is expected to meet again Wednesday with officials.

Negotiations have focused on initial roll-out and administration, but Shirkey said the 29-hour weekly mandate will likely be reduced to more closely mirror a 20-hour work requirement for food stamp recipients.

“I believe we’re getting very close to the governor, his staff and the department being on board now finally,” Shirkey said, “and I’m happy about that.”

joosting@detroitnews.com

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