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August 2013: Legislative Update

Medicaid Expansion is Good Public Policy

Sometimes a decision is so simple, so obvious, that it is an outrage when it doesn’t get done. Welcome to the 2013-14 conservative-led State Legislature. Medicaid expansion is one of those decisions; the benefits are there for people, hospitals, business and the state budget, yet ideologues continue to hold it back.

The expansion of Medicaid through HB 4714 will provide health insurance for people with income levels that are between 100% and 133% of the poverty line, meaning that those making about $30,000 per year for a family of four would receive health care. In total, about 320,000 people from every county across Michigan will get health care in 2014; nearly 500,000 by 2021.

This mean nearly a half million people can have access to a primary care physician. It means nearly a half million-dollar golden parachute or severance package seen by CEO’s. This is about a pension that helps sustain the basic necessities needed when we get too old to work—like groceries, clothing and medicine. Retired workers in Detroit are not responsible for the city’s economic state. They paid their share into their retirement systems. It’s not the current workers fault either as they have taken many concessions, working more for less. The average Detroit city pension is less than $19,000 per year.

million people getting routine check ups or seeing a doctor instead of an emergency room for common illnesses. Emergency rooms cost 6 times more than going to a primary care physician. The result? A healthier Michigan at lower medical costs than status quo.

What will it cost our state? There is no net cost to Michigan over the next 21 years, and Michigan will save $206 million in General Fund costs in 2014 and $320 million in uncompensated care costs by 2022. The next ten years will show a net savings of approximately $1 billion according to Center for Health Research & Transformation. Federal funds will cover 100% of the cost of Medicaid expansion from 2014 to 2016, 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and subsequent years.

Business benefits too. Employees who do not have health care are more likely to put off seeing a doctor and this sometimes causes an illness to worsen leading to increased costs and time off the job. Expanding health care will keep people healthier and more productive. Medicaid expansion would provide Michigan businesses with lower health insurance premium costs and provide some employers relief of ACA penalties.

Senators Caswell and Colbeck have offered alternatives that fall short of providing health benefits and savings that HB 4714 provides. According to James Haveman, Michigan Department of Community Health Director, Senator Caswell’s and Senator Colbeck’s proposal do not meet Michigan’s needs and would cost the state far too much. In the case of Mr. Colbeck’s proposal, it could cost the state $9 billion dollars.

HB 4714 saves lives and saves money. Michigan State AFL-CIO supports HB 4714 and urges the Senate to pass this bill now. We urge you to contact your Senator and tell them to support this needed legislation.

Retirement Security

You’ve worked all your adult life, living by the rules, doing what you were supposed to do. You lived up to your end of the bargain. In return, you should get what was promised to you—your pension. Let’s be clear.

The promise of retirement security is something exchanged in lieu of higher wages or some other benefit like vacation time—it is earned compensation. And let’s be clear about another thing. We’re not talking about the million-dollar golden parachute or severance package seen by CEO’s. This is about a pension that helps sustain the basic necessities needed when we get too old to work—like groceries, clothing and medicine. Retired workers in Detroit are not responsible for the city’s economic state. They paid their share into their retirement systems. It’s not the current workers fault either as they have taken many concessions, working more for less. The average Detroit city pension is less than $19,000 per year.

Now comes Detroit’s Emergency Manager who claims the city’s obligation to all those workers who played by the rules should be cast aside allowing Detroit to break its promises. He wants to treat this like a tangled fishing line—just cut it off and start over. The problem is this tangled fishing line contains the lives of tens of thousands (20,000 retired, about 9,000 active) people who were promised, and rely on, their pensions to live.

If you take the time to untangle the mess you’ll find that things like predatory lending practices and excessive foreclosures by banks leading to vacated communities that further declined the tax base and the values of neighboring homes, pushing even more people into upside-down mortgages. You’ll also see the results of corporate CEO’s who relentlessly sought out-sourcing for higher profits at the expense of fair wages and safe working conditions for American workers, while avoiding paying the taxes that would have strengthened Detroit. You’ll find that Governor Snyder and the conservative-led State Legislature cut revenue sharing to Detroit by tens of millions of dollars. In fact, the state owes Detroit hundreds of millions of dollars that were never paid under a revenue sharing agreement that took away Detroit’s ability to manage their own finances.

If you look hard enough you’ll see there are a number of reasons for Detroit’s financial problems, but blaming workers is just a convenient way to spin the story. Gutting the modest pensions of Detroit’s public service employees to give more to banks and bond investors is wrong. Gutting modest pensions will reduce the amount of money spent in the local economy-making the city even less stable. Workers go to work every day living by the rules, doing what they are supposed to do. In return, they should get what was promised.

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