Legislative Action Completed on FY14 Budget for Community Health

Full report in PDF

On June 4, the Michigan Legislature approved the Fiscal Year 2014 budget for the Department of Community Health along party lines. During the joint House/Senate Conference Committee debates, the GOP members of the Subcommittee in general did not support programs proposed by the Republican governor   to improve the health status of Michigan residents while the Democrats did. Democratic conferees declined to sign the Conference report. Agreements that are negotiated in conference committees can only be approved or rejected by the full House and Senate, but cannot be amended on the floor.

Of critical importance, lawmakers did not support the governor’s recommendation to accept federal funds   to expand eligibility for the Medicaid program as called for in the Affordable Care Act and, therefore, could not budget the state General Fund savings as recommended by the governor. It is not too late, however, to accept the federal funds available to Michigan to expand Medicaid eligibility. Discussions continue outside the budget process about ways to expand Medicaid. If agreement can be reached, a supplemental appropriation can then be approved to include the federal funds.

It is worth noting that the final DCH budget is nearly $200 million General Fund higher than the Executive Budget recommendation, but nearly $1.5 billion lower in federal funds. The infusion of federal revenue was expected to create up to 18,000 new jobs over time.

The Legislature agreed, in part, with other key initiatives recommended by the governor including the Healthy Kids Dental program, infant mortality reduction initiatives, mental health and substance abuse service improvements for veterans, mental health innovation grants for high risk children and youths, better coordinated care for those with chronic mental health conditions, and Health and Wellness initiatives.

Legislative initiatives included increased funding for pregnancy and parenting support projects and evidence-based programs to reduce infant mortality, partial restoration of prior local public health operations cuts, increased funding for the Michigan Essential Health Provider Program, the lead abatement program, traumatic brain injury services, and autism  centers.

The final budget includes $15.4 billion in total funding for the DCH in Fiscal Year 2014, a 2% increase over current year funding, but 7% below the governor’s recommended budget for Fiscal Year 2014. The final budget includes the consensus Medicaid base cost estimates agreed to at the May Revenue Estimating Conference as well as funding to ensure actuarially sound managed care rates for both physical and mental healthcare.


Governor: The governor’s recommended budget for the DCH included an 11% increase in total spending, but a 3% reduction in General Fund primarily due to the inclusion of federal funds for the Medicaid eligibility expansion and corresponding General Fund savings.

Final Budget: The rejected the Medicaid expansion, increasing total funding by only 2%, but state General Fund by 3%.

Included in the final DCH budget are the following: 


Medicaid expansion

Governor: The governor’s budget included 100% federal funds to support the expansion of Medicaid coverage to very low-income parents and childless adults up to 133% of the federal poverty level ($15,282 for single person, $25,975 for family of 3). This influx of federal revenue would increase total Medicaid funding to $12.3 billion, and result in savings in the state’s General Fund of $206 million by allowing the state to use federal funds to provide comprehensive services to a population that is currently eligible for very limited state funded health benefits. The governor recommended that half of the savings in state funding ($103 million) be deposited in a newly created healthcare savings fund, with the remainder used to expand the Healthy Kids Dental program and other state services.

The expansion would increase the number of Michigan residents covered by Medicaid from approximately 1.8 million to 2.2 million, reducing the number of uninsured adults by 46%.

Final Budget: The Legislature rejected the governor’s recommendation to accept Michigan’s share of federal funds to expand healthcare coverage to 320,000 low-income parents and individuals through the Medicaid program. If Medicaid is not expanded, it will force many to remain uninsured, reduce access to primary care, and increase costs through emergency room care. The General Fund savings from expanding eligibility for Medicaid also will not be realized. House Republicans did propose legislation, H.B. 4714, that, under a federal waiver, would partially expand Medicaid eligibility to so-called nondisabled  adults, impose a 48 month time limit, and require full federal financing for the newly eligible as well as currently eligible nondisabled adults. It is unlikely that such a waiver would be approved by the U.S. Secretary of Health and Human Services. HHS has repeatedly indicated it would not approve partial expansions and time limits are contrary to the intent of the law. Discussions are ongoing, and a substitute bill is expected to be released on June 10th.

Healthy Kids Dental

Governor: The governor included $11.6 million ($3.9 million in state General Funds) to expand the Healthy Kids Dental program to 70,500 children in three counties: Ingham, Ottawa and Washtenaw. With this expansion, 50% of eligible children statewide would be covered in Fiscal Year 2014, and the governor indicated his intention to expand the program to an additional 100,000 children in Fiscal Year 2015.

Final Budget: The Legislature ultimately concurred with the governor’s recommendation, even though neither the House- nor Senate-passed budgets included the funding and/or counties recommended by the governor.

Graduate Medical Education

Governor: The governor’s budget cut the one-time funding of $4.3 million for the Graduate Medical Education program. These funds are used by teaching hospitals to offset the costs of operating medical residency programs for physicians, and to provide care to uninsured and other vulnerable populations in hospitals and clinics.

Final Budget: Lawmakers did not concur with cutting the funding for Graduate Medical Education and retained the Fiscal Year 2013 level. However, the designation of the $4.3 million as one-time  funding in boilerplate is maintained.


Medicaid expansion

Governor: The Medicaid expansion proposed by the governor in his Fiscal Year 2014 budget included comprehensive mental health services for the newly eligible population.

Final Budget: By rejecting the Medicaid expansion, the Legislature denies comprehensive mental health services to an estimated 320,000 Michigan residents, forcing them to go without needed services, be added to a waiting list for services, or receive services through the corrections system. The non-Medicaid mental health funding was reduced by nearly $54 million from Fiscal Year 2010 to Fiscal Year 2012.

Mental health innovations

Governor: The governor included $5 million in one-time General Fund dollars for mental health innovations, including: (1) comprehensive home-based mental health services for children to reduce child hospitalizations and strengthen families ($2.5 million); (2) a pilot program to address the needs of youths with complex behavior disorders ($1 million); and (3) mental health “first aid” training for a range of public and private groups, including law enforcement officers, to ensure that they can identify mental health problems ($1.5 million).

Final Budget: The Legislature concurred with the governor’s recommendation.

Mental health services for special populations

Governor: The governor reduced funding for mental health services for special populations from $8.8 million to $5.8 million, a cut of 34%, by eliminating the $3 million in designated one-time funding. Included in the cuts are the Hispanic/Latino Commission, ACCESS, Arab/Chaldean services, the Chaldean Chamber Foundation, and the Michigan Jewish Federation.

Final Budget: The Legislature rejected the governor’s recommendation, retained the $3 million and reclassified it as ongoing funding.

Jail diversion initiative

Governor: The governor redirected $1.6 million in state funds currently used by psychiatric hospitals to a new jail diversion initiative that will enhance current diversion efforts for individuals with mental illness, emotional disturbances, or developmental disabilities within five Michigan communities.

Final Budget: The Legislature concurred with the governor’s recommendation, adding language that gives priority for funding to county sheriffs and community courts, specifying the St. Joseph County Sheriff and the 36th District Court community court project.

Mental health and substance abuse services for veterans

Governor: The governor recommended $60,000 to fund a strategic action plan to improve mental health and substance abuse services for veterans and their families, including training and credentialing for community mental health and substance abuse programs, co-location with services provided through the Veterans Health Administration, training for law enforcement officers in recognizing post-traumatic stress disorders, and training in military cultural competency  for Community Mental Health boards.

Final Budget: The Legislature concurred with the governor’s proposal.

Services for persons with chronic mental health conditions

Governor: The governor included $900,000 ($90,000 General Fund) for three behavioral health home  demonstration projects for Medicaid recipients with chronic physical and mental health conditions. The model coordinates physical and mental health care, including comprehensive case management, family education and service referrals. The demonstration would target high risk, high need individuals with mental illness for coordinated care efforts. The demonstration projects would be located in the Washtenaw area (Washtenaw, Livingston, Lenawee and Monroe counties), Northern Michigan (21 counties), and either Saginaw County or the Genesee region.

Final Budget: The Legislature concurred with the governor’s recommendation.


New office established

Governor: The governor recommended 10 staff and $1.8 million ($1.5 million General Fund) to establish a healthcare transformation office to develop collaborative partnerships, improve customer focus, and recommend organizational improvements and efficiencies to reduce bureaucratic obstacles in contracting.

Final Budget: The Legislature concurred with the governor’s proposal.

Innovation grants

Governor: The governor recommended $3 million in state General Fund for competitive grants to address emerging healthcare and service delivery system issues and needs, encourage innovation in service delivery, and build partnerships between the public and private sectors.

Final Budget: The Legislature funded the innovation grants with $1.5 million in state General Fund, and specified that $250,000 would be allocated for a chronic disease syndrome study.

New database

Governor: The governor made no recommendation.

Final Budget: Lawmakers added $300,000  to  establish a database for consumers and insurers that would include comprehensive price and quality information on medical procedures and healthcare services.


Local public health services

Governor: The governor recommended no changes in funding for local public health essential services, which are funded at $37.4 million in the current fiscal year.

Final Budget: The Legislature included a $2 million restoration of the $3.2 million in local public health departments’ operations funding cuts that occurred between fiscal years 2010 and 2012.

Health and Wellness Initiative

Governor: The governor’s budget removed $5 million in one-time state funding available in the current year for Health and Wellness initiatives, and then increased ongoing funding by $1.5 million, bringing total funding to $8.7 million—a net reduction of $3.5 million or 29% from FY 13. The largest cuts in the governor’s budget include the elimination of funding for cancer prevention and control ($862,500), an 87% cut ($750,000) in the pregnancy prevention program, and a 44% cut in both the 4×4 wellness program ($1 million) and cardiovascular health programs ($296,400). Also reduced are the diabetes and kidney programs, health disparities, the Michigan Care Improvement Immunization Registry, the Michigan Model for school health, and smoking prevention programs.

Final Budget: The Legislature concurred with the reduction of the one-time funding of $5 million, but reclassified some one-time funded projects as ongoing and added only $1 million in ongoing funding, resulting in total recommended funding of $8.2 million. Lawmakers eliminated funding for cancer prevention and control, and reduced 4×4 wellness program funding from the governor’s recommended $1.25 million to $850,000. The overall reduction to Fiscal Year 2013 funding is nearly $4 million state General Fund, a significant reduction in commitment to creating a healthier Michigan.

Infant mortality reduction

Governor: The governor included $2.5 million in state funds to implement recommendations in the Infant Mortality Reduction Plan, including regional perinatal care, initiatives to reduce medically unnecessary deliveries before 39 weeks, the promotion of safe sleep practices for infants, and expanded home visiting programs. Medicaid currently pays for 51% of all Michigan births, and Michigan ranked 36th in the country in infant deaths in 2012, with infant deaths rates three times higher for African American babies.

Final Budget: The Legislature funded the governor’s recommendation at a lower level, $2 million all state funds.

Legislative initiatives to reduce infant mortality

Governor: The governor’s budget did not include new funding for home visitation or parent support programs. During last year’s budget cycle, the Legislature approved $2 million all federal TANF funding for a home visitation and support program that promotes childbirth and adoption, as well as an additional $1 million for the Nurse Family Partnership program. The governor vetoed both budget increases last year.

Final Budget: The Legislature included the House-pas-sed $700,000 in state General Fund for a new pregnancy and parenting support pilot project to promote childbirth and alternatives to abortion, as well as $500,000 in state funds for evidence-based programs to reduce infant mortality, including the Nurse Family Partnership program. Budget language specifies the goals of the pregnancy and parenting support pilot are to promote childbirth choice, educate parents about adoption options, improve parenting skills, and provide abstinence education. Counseling, support and referral services would be available to women during pregnancy through 12 months after birth. Budget language also specifies that the infant mortality reduction funding is to be used to improve training and support for nursing teams or other teams of qualified professionals, recruit families in high-need communities, and plan and market programs to raise awareness, engage stakeholders, and recruit nurses.

Fee increases to support current programs

Governor: The governor’s budget recommended an increase in fees to provide revenue to maintain several programs with stagnating or declining revenues. New fees are recommended for emergency medical services licensure and regulation, $1 million, (fees have been frozen for more than 20 years); certificate of need research and operations, $700,000; and vital records services, $1.5 million.

Final Budget: The Legislature concurred with the governor’s recommendation. All of these fee increases require statutory changes.

Michigan Essential Health Provider Program

Governor: The governor recommended no change to this program. This long-standing program had its state funding frozen in Fiscal Year 2010, and was scheduled to be completely phased out in FY 13. This program assists primary care providers practicing in underserved areas with the repayment of their health education loans. The Legislature partially restored the program in Fiscal Year 2013 by adding $1 million ($500,000 General Fund).

Final Budget: The Legislature concurred with the Senate recommendation to further increase program funding by $1 million ($500,000 General Fund).

Other legislative initiatives

  • Lead Abatement – The Legislature added $1.25 million in state General Fund to remove lead hazards from homes in areas with high incidences of lead-poisoned children.
  • Traumatic Brain Injury Treatment – The Legislature added $1.25 million General Fund for TBI services.
  • Autism Education Centers and Program Grants – The Legislature retained the $500,000 grant to Eastern Michigan University (the governor recommended elimination), and added $500,000 one-time grants for Oakland University, and Central and Western Michigan Universities.