Legislative Report

December 2004

It seems there is never a dull moment for observers of the Lansing political scene. Even though during much of November the Legislature was not in session. There still was much news coming from the Capitol. There was the debate over the size of the projected deficits for the current fiscal year and next fiscal year (beginning October 1, 2005). The Senate Majority Leader criticized the Governor for labor contracts providing for a 10% salary adjustment over a three year period for state employees. There is some uneasiness about the newly ratified labor contracts which contain a provision for same-sex domestic partner benefits. Additionally, there was discussion of what legislation would or would not be considered during the lame-duck session which ends December 9th. Bills not passed by then will die and have to be reintroduced in the next legislative session beginning in January.

The following report of legislative actions on specific bills may be of interest to seniors and retirees:

HB 5947 & HB 5970 are bills which have been signed into law as Public Acts 410 and 411, respectively. These Acts potentially could reduce the cost of certain prescription drugs and medical supplies. Manufacturers of pharmaceuticals and medical devices sometimes offer rebates for their products by distributing coupons or paying part of a consumer’s co-payment. This has not been done in Michigan because companies fear that doing so would be illegal under Michigan’s Health Care False Claim Act. They believe that such coupons or partial co-payments could be interpreted as kickbacks in violation of the False Claims Act. Act 470 clarifies that the use of discount coupons or receipt of partial co-payments from manufacturers for one’s own medical supplies is not illegal and can be accepted by pharmacies. Act 471 clarifies that it is not illegal for a drug manufacturer or medical supplier to distribute such coupons or offer co-payment assistance. It is unclear how Express Scripts will handle coupons and discounts. SERA will see clarification from the DMB Office of Employee Benefits. Michigan becomes the last state to make the use of coupons and discounts for pharmaceutical and medical supplies undisputedly legal.

HB 4458 has become law as Public Act 407. This law allows retail outlets to control the price of liquor products formerly set by the Liquor Control Commission. The LCC still establishes the minimum price for packaged liquor. Retail outlets can raise the price of the product, but cannot reduce it below the price established by the Commission. Some dispute the “free market” argument use by those who pushed for passage of this act because price competition can only be above the base price established by the State. Had the State discontinued its price-setting role, prices could have dropped and generated true free market competition. This writer’s interpretation of this act: Consumer unfriendly expect liquor prices to go up.

HB 6324 was recently introduced. It would provide a post-retirement benefit for those individuals who retired prior to September 30, 1986 (and who formerly were eligible for “Thirteenth checks”). The benefit would be calculated on a “reverse pyramid” , concept with percentage increases ranging from 4% for those retiring in September, 1986 and increasing two percentage points for each year a person retired prior to that date. The percentage increase would be capped at 30% for those retiring before October 30, 1973. This bill has no chance of passage in the current lame-duck session, but hopefully will be reintroduced next year. While success in getting this bill passed is problematic due to the state’s fiscal problems, SERA will vigorously pursue its passage once it is reintroduced in the new legislative session.

SB 1150 is a bill dealing with the out-of-pocket expenses for enrollees in health maintenance organizations. The bill specifies that the coinsurance for basic health services and co-payments for facility-based outpatient surgical services cannot exceed 50% of the amount the HMO pays to an affiliated provider of services and the co- payment must be based on the provider’s standard charge for the service. The bill also requires that out-of-pocket costs be adjusted annually based on the Consumer Price Index. It also allows the HMO to petition the Insurance Commissioner for a price adjustment based on current market conditions. Under this bill, out-of-pocket costs for services rendered by non-affiliated providers can be up to twice the costs for affiliated providers. The bill has passed the Senate and is close to passage in the House.

HB 4880 & SB 486 are mobile home bills establishing the amount of state specific tax the owner of an occupied mobile home would have to pay. Under HB 4880, the payments would range from $4.50 per month beginning ’in 2005 and increase annually until they reach $12 per month in 2010. This bill has passed the House and has been reported out of the Senate Finance Committee. However, the Senate Finance committee also reported out its own version of a state specific tax in SB 486. This bill bases the payment on the value of the mobile home. Homes valued at less than $3000 would be taxed at $1.75 per month while those valued at $27001 would be taxed at $16.25 per month. There are eight value categories in between the above amounts. Homes valued at more than $30,000 would have an additional $2 increase in monthly payment for each $3000 in value above $30,000. The decision as to which version of the two bills to adopt will be made by the full Senate.

HB 6311 is a bill which was introduced and passed to accommodate a term-limited legislator who was successful in being elected to the office of Ypsilanti Township treasurer. The person elected to this position assumes office immediately upon election. However, in order to qualify for lifetime health care benefits from the state. the legislator must remain in office until December 31st. A person cannot hold two elective offices at once; thus the conflict. This bill which undoubtedly will be passed. provides that a member of the Legislative Retirement System is vested in health insurance coverage provided the following conditions are met: (1) is not a member vested in the defined benefit system (2) has completed 5 years and 10 months of service as a qualified participant and (3) has resigned from office to immediately assume duties of an elective public office. The passage of this bill will permit the legislator to resign from the legislature immediately without losing her state sponsored health insurance coverage.


Approval of Union Agreements — The employee unions have reached agreement with the Office of the State Employer for three year contracts beginning October 1.2005. The agreements call for a 10% raise over the three year period. Senate Majority Leader Ken Sikimma, has strongly criticized the Governor for negotiating such agreements in view of the state’s unstable fiscal picture. He has accused the Governor of being fiscally irresponsible by spending money on employee raises which the state does not have. He called for an early Estimating Conference where the House and Senate Fiscal Agencies along with the state treasurer meet to agree on what the state’s projected deficit will be. The conference was held in early December. Another clause in the contracts has come under fire. The same sex domestic benefits clause appears to conflict with the Constitutional amendment recently passed defining marriage as a union between a man and a woman. The Governor’s office has notified the unions that they will withdraw that clause until the legality of it can be determined.

Major Bills Not Passed — Among the major bills which will die at year-end are those dealing with: electricity regulation, mail order prescriptions, use of credit scores in establishing insurance rates, “racino” gambling, grandparent visitation rights, and a bill which would have allowed natural gas pipelines lines to be routed near cities and townships without local government approval. The failure of the latter bill was an especially important victory to the citizens of Lansing.

Changes Announced by Secretary of State — Two major changes have been announced by the Secretary of State: First, In-person transactions may be paid for using a Discovery Card. There will be a $1.75 surcharge for use of this credit card. Negotiations are underway with other credit card companies :for the use of their cards also. The Discover card cannot be used for mail, telephone, or computer transactions, but Visa and Mastercard credit cards may be use for these transactions. The other change involves the simplification of vehicle license renewal via computer. A personal identification number will appear on the renewal form along with a space for credit card number and credit card expiration date. Credit card authorization will be real time and lets the individual know immediately if credit is approved. Users of this system may enter their e-mail address and receive a confirmation of the transaction. The entire renewal process should take a couple of minutes.

Changes in House Leadership — With the current House Speaker Johnson leaving office as the result of term limits, the Republicans elected a conservative “youth team“ to leadership positions. Representative Craig DeRoche of Novi was elected speaker of the House and Representative Chris Ward of Brighton was elected Majority Floor Leader. DeRoche is 34 years old and Ward is 31 years old. This constitutes the youngest leadership team in the modern history of the House. The Democrats reelected its current leadership: Dianne Byrum of Onondaga was elected Minority Leader and Mary Waters of Detroit was elected Minority Floor Leader.

FIA Name Change — Beginning in late January, the Family Independence Agency’s name will change to the Department of Human Services as the result of an Executive Order issued by Governor Granholm. In making the change, the Governor indicated that the new name more accurately reflects the range of services provided by the Department.

People in the News

Stanley Steinborn who served as Deputy Attorney General for most of, Frank Kelley’s tenure recently died at the age of 72. Mr. Steinborn joined the Attorney General staff in 1961 and became Deputy Attorney General in 1973. He retired in 1997.

Richard Headlee, a one-time gubernatorial candidate whose name has become a household , word because of the Constitutional amendment which bears his name. recently died at the age of 74. The “Headlee Amendment” put caps on state government growth and allowed voter control ~of municipal tax increases among other things.

Dick Posthurnus, former Lt. Governor and former legislator is recuperating after having his prostate removed a week after discovering it was cancerous.

Debbie Stabenow, Michigan’s junior U.S. senator, was elected as Democrat Caucus Secretary, the third highest position in the Democratic leadership structure of the U.S. Senate.

Andy Dillion, who won the vacant 17 District House seat and the full term beginning in January was sworn into office to complete the two months of the vacancy. The seat has been vacant since Representative Dan Paletko resigned last January to become Mayor of Dearborn Heights.

Editor’s note: Alvin Whitfield is former President of the Lansing SERA Chapter and former Chairperson of the Michigan SERA Council and current Legislative Representative for both the Council and the Lansing Chapter. He may be contacted at 1241 Runaway Bay Drive, C-3, Lansing, Michigan 48917; phone 517/703-9666; e-mail: alwhit@worldnet.att.net.

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