Why a Huge State Government-run Health Plan is Still a Risky Idea

The Facts on Speaker Dillon’s HB 5345 (H-1)

Why a Huge State Government-run Health Plan is Still a Risky Idea

• Creating a mandatory state government-run health plan would be one of the largest — if not the largest — expansions of state government in Michigan in recent history.
• HB 5345(H-1) gives state government more than 300 new powers and responsibilities, including a public option.
• HB 5345 imposes a new 1% to 2% tax on local governments and school districts to pay the state’s costs of operating the plan.
• HB 5345 is not a structural fix for the state budget. In fact, it would add $4 billion in new financial liability for the medical bills of hundreds of thousands of local government and school employees to the state’s annual budget.
• There is absolutely no proof the new state government-run health plan would save one dime. In fact, the House Fiscal Agency has declined to estimate savings. No credible independent source has been able to quantify one penny in savings.
• A Public Policy Associates analysis of HB 5345 estimates it could cost Michigan taxpayers up to $500 million to launch the state-run health plan and another $370 million a year to administer.
• A mandatory state government-run health plan could make Michigan’s long-term structural budget deficits worse. Last year North Carolina’s $2.2 billion state health fund needed a $658 million legislative bailout.  New Jersey’s state health plan increased premiums by 25 percent on school districts. Nevada’s state fund is running a $100 million deficit which will force the Nevada Legislature to use tax dollars to bail out the fund or to slash benefits for 74,000.
• HB 5345 makes local governments and school districts financially liable for any cost overruns and budget shortfalls in the state-run plan. The state could send locals an unexpected bill for a budget shortfall in the middle of the fiscal year.
• HB 5345 ends local control and eliminates local collective bargaining over total compensation and health benefits.
• The cost of health benefits is already being reduced today for local governments and school districts through local control, competition and local choices. Teachers, firefighters, police, bus drivers and other public employees have saved state and local governments billions over the past five years by choosing less costly plans and paying more out of their own pockets.
• More than 90% of the public employee health insurance market is served by Michigan companies in a highly competitive free market.

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