Capitol News

August 6, 2017

The Legislature met only one day in July and plans to meet only one day in August. But there is still plenty of public policy and political news.

NEW PENSION TAX BILL

The 12th bill repealing or modifying the Michigan pension tax was introduced on July 12 and assigned to the House Tax Policy Committee chaired by Rep. Jim Tedder (R-Clarkston). The new HB 4816 is sponsored by State Rep. Thomas Albert (R-Belding). The bill would:

  • Allow a tax deduction on retirement income to those born before 1950. (Current law allows tax deduction for those born before 1946.)
  • Taxpayers born in 1950 through 1955 could take a deduction of $20,000 for a single return and $40,000 for a joint return against retirement income. When those taxpayers turn 67, they could take the deduction against all forms of income. Different deductions would apply to retirees from governmental units that weren’t covered by Social Security. (Current law starts this phase-in for taxpayers born in 1946 through 1952.)
  • Taxpayers born after 1955 would receive no exemption for retirement income until they turn 67, except for the Social Security exemption. They could claim some deductions against all income once they turn 67. (Current law starts this phase-in for taxpayers born after 1952.)

Although this bill is not a total repeal such as proposed in HBs 4052, 4092, 4132, 4182 or SB 41, it would give some tax relief to current and future retirees.

MEDICARE AND HEALTH CARE DEBATE UPDATE

Voucherizing Medicare — On July 24, the U.S. House Budget Committee approved a 2018 budget resolution that would end Medicare’s guarantee of health coverage by converting the program to a premium support system (vouchers) according to Medicare Watch. It would cut Medicare spending by $487 billion, largely by shifting more health care costs to beneficiaries. President Trump’s proposed budget spared Medicare from cuts.

The House proposal would give beneficiaries a voucher to help buy either private health insurance or a scaled-back form of Medicare. It would apply to all new beneficiaries starting in 2024 and for those who volunteered for it. It would also further increase premiums for higher income people. The plan also limits medical malpractice litigation by capping awards and attorney fees, reducing the time for filing claims, and other changes. The eligibility age would be raised to 67 over time. The plan would increase beneficiary costs in several additional ways and reduce Medicare payments to teaching hospitals for the costs of medical education. The bill is H.R.3358. The Senate has not yet considered the proposal.

ACA Repeal — In the early morning hours of July 28, the scaled-back “skinny” version of the Republican plan to repeal key parts of the Patient Protection and Affordable Care Act (Obamacare) was defeated narrowly in a dramatic U.S. Senate vote. If it had passed, federal funding for Medicaid and Medicaid expansion would have been changed and reduced significantly. Two-thirds of those in nursing homes and assisted living are Medicaid funded, including some State of Michigan retirees or their spouses who have exhausted their assets and whose incomes cannot sustain the high cost of long-term care.

SOM Response — In an effort to get Congress to repeal Obamacare, President Donald Trump had threatened to withhold federal government payments to health insurers to reimburse them for the premium subsidies they provide to low and moderate income people buying health insurance in the individual market.

On August 2, the State of Michigan announced it was delaying by 30 days the posting of 2018 premium rates for health care insurance on the state’s federally-run marketplace due to uncertainty over the federal government’s plans. The Michigan Department of Insurance and Financial Services had required insurers to submit two rate filings — one that assumes no subsidies and one that does.

Open enrollment begins November 1 and continues through December 15 for about 400,000 Michiganians who buy their insurance on the insurance marketplace. An estimated 80 percent are eligible for tax credits that would lower their premiums an average of $213 a month. People with incomes up to 250 percent of the poverty level are eligible for the subsidies that total about $166 million to Michigan insurers.

Expand Medicare — U.S. Senator Debbie Stabenow introduced a bill on August 3 that would allow American citizens or a permanent resident of the United States age 55 to 64 to purchase Medicare benefits. It is co-sponsored by seven other U.S. Senate Democrats.

There are 1.4 million people in Michigan between 55 and 64. The average person in this age group pays more than $1,200 in annual out-of-pocket costs per year and has a greater risk of having chronic conditions or medical emergencies according to the Stabenow media release. The bill is S. 1742 and has been referred to the U.S. Senate Finance Committee.

BALLOT PROPOSAL UPDATE

Ballot measures for marijuana legalization, a part-time legislature, closing the pipeline in the Mackinac straights, legislative redistricting, prevailing wage repeal, earned paid sick leave, and increasing the minimum wage and more may be on the 2018 ballot. In 2012 there were six proposals on the ballot and all failed with the aid of an advertising campaign financed by the Michigan Chamber of Commerce that urged voters to nix all of them.

Redistricing — Voters Not Politicians, the ballot committee sponsoring the anti-gerrymandering Independent Citizens Redistricting Commission proposal, is still working with the Bureau of Elections on finalizing ballot language. As described in detail in the July Capitol News, the new Commission would have 13 members - 4 Democrats, 4 Republicans, and 5 non-affiliated members. At least two people from each of those three groups would have to approve the maps for state legislative and Congressional districts. All registered voters would be eligible to apply to be a Commissioner except for current and recent candidates for partisan political office, elected partisan officials, registered lobbyists, appointed officials of national, state or local political parties, and close relatives of the preceding people.

Michigan SERA has endorsed the VNP effort and encourages its chapters and members to get involved by inviting a speaker for a chapter meeting, volunteering to collect signatures, or donating to the committee. Information is available at www.votersnotpoliticians.com. SERA Coordinating Council delegates received an update on the proposal from VNP’s Walt Sorg at its August 4 meeting.

Others — The effort to legalize marijuana is claiming to have about half their required signatures at this time. Recently the Board of State of Canvassers received a draft of a measure to increase Michigan’s minimum wage to $12 an hour by 2022 and require annual inflationary adjustments. The measure was submitted by the Michigan One Fair Wage Committee.

The MI Time To Care Coalition indicates that it intends to pursue an initiated law to allow workers to earn paid sick or family leave time. Employees of companies employing more than 10 people would earn one hour of paid sick time for every 30 hours worked and would be capped at 72 hours of sick time annually unless the employer allowed for more. Unused time would carry over each year. For employers with fewer than 10 employees, workers would be capped at accumulating 40 hours paid sick time per year and, while the unused time would carry over, no more than 40 hours of paid time and 32 hours unpaid would be available per year.

AUTO INSURANCE RATE UPDATE

For the fourth year in a row, Michigan topped Insure.com’s list of the most expensive state for car insurance. In a recent study, Insure.com found Michigan had an average insurance premium of $2,394, more than $400 higher than the state with the second-highest premium, Louisiana at $1,921 and more than $1,000 greater than the national average of $1,318.

The Insurance Alliance of Michigan believes that rampant fraud, the lack of any cost controls on medical providers and hospitals, and the requirement that all Michiganders purchase unlimited, lifetime medical benefits all conspire to make Michigan the most expensive state in the nation to purchase car insurance. Michiganders pay a $170-per-vehicle fee to the Michigan Catastrophic Claims Association, which then reimburses auto insurers for auto crash-related medical costs that exceed $555,000.

CPAN Study — These rates drive the continuing quest to lower Michigan’s auto insurance rates by amending Michigan’s no-fault auto insurance statute. In anticipation of legislative activity this fall to address high auto insurance rates, the Coalition to Protect Auto No-Fault (CPAN) tested premiums in eight cities: Detroit, Flint, Grand Rapids, Howell, Iron Mountain, Ludington, Owosso and Warren for an unmarried, 30-year-old female driver with a perfect driving record. The same address, car model, miles driven, and prior insurance history were used in the study, and the basic state-mandated minimum insurance coverage was sought for each quote from AAA, Allstate, Esurance, Liberty Mutual, Progressive and State Farm, which represent more than half of the Michigan auto insurance market, and for which extensive testing can be performed online.

It found several large insurers charge significantly higher rates to motorists in Michigan with perfect driving records simply because of their job title, schooling, and home ownership status, discriminating against working class good drivers and favoring executives and professionals with discounted rates, the study found.

The study found insurance companies charged good drivers in the state $233 more per year for basic auto insurance if they have “blue collar jobs,” are out of work, don’t have a college degree and rent instead of own their home.

The study also claims a factory worker living in Detroit, Flint or Warren pays an average of $265 more for auto insurance than an investment banker for the same policy. Even if both have perfect driving records and live at the same address, some working class drivers will pay as much as $694 more per year for basic auto insurance.

For example, the study said a Detroit driver who is a lawyer and a homeowner would pay $3,843 annually, while a factory worker with a high school diploma who rents would pay $4,218 annually.

Legislative action — The Chair of the House Insurance Committee, Rep. Lana Theis (R-Brighton), wants to tackle auto insurance reform when the legislature returns this fall she says. Rep. Tim Greimel (D-Auburn Hills), the Democratic Vice Chair of the Committee, is interested in reform if consumer protections are included. Detroit Mayor Mike Duggan wants to lower rates in Detroit and expects to be active on the issue.  Democrats want to stop the use of ZIP codes when determining rates. Rep. Theis has said statistically, there is more risk in cities like Detroit and using geographical location as a factor to determine premiums is necessary. Look for action this fall concerning auto insurance reform and communicate with your state legislator about it.

Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.

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