News Story

Michigan Creeps Closer to Obamacare 'Exchange'

If Michigan creates a state Obamacare insurance “exchange,” doing so could potentially undermine the state’s own lawsuit against the new federal health care law. Yet despite an item in then-candidate Rick Snyder’s 10-point plan to “reinvent” Michigan, promising a more “patient-centered model” of delivering health care, Gov.Snyder has not made a decision on whether to create an exchange, or alternatively, join a handful of other GOP governors who have refused to establish one. Kelly Niebel, a spokesperson for the Michigan Department of Community Health, told CapCon, "Governor Snyder has said we will follow the law, adapt accordingly as it changes and act in the best interest of Michigan."

Nevertheless, MDCH has undertaken a number of actions paving the way for a Michigan exchange, paid for by a $1 million federal grant authorized under the new law. (See “Michigan’s Obamacare Exchange ‘Work Groups,’” below.)

Under the federal Patient Protection and Affordable Care Act, if a state does not create an insurance exchange that meets all the rules imposed by federal agencies, the federal government will instead create one in the state itself. According to John Graham of the Pacific Research Institute, so far only 10 states have passed laws authorizing exchanges. In three states, enabling legislation has passed one house of the legislature. Two other states had exchanges before Obamacare became law (Massachusetts and Utah).

Republican Govs. Rick Scott of Florida, Nathan Deal of Georgia and Bobby Jindal of Louisiana have flatly refused to create state exchanges. Oklahoma Gov. Mary Fallin may also be in this camp. The cost to their states may be one reason for the slow progress and outright refusals. Those costs could be substantial: In 2009, the exchange created under Massachusetts’ “Romneycare” law cost $26 million in payments to vendors and $3.4 million in employee compensation.

Meanwhile, Michigan is one of 26 states that are parties to the Florida v. U.S. Dept of Health and Human Services lawsuit challenging the new law. In the first ruling on the case last winter, federal district court judge Roger Vinson declared the law unconstitutional, but then stayed the effect of his ruling because, among other reasons, he said, “the severity of that injury is undercut by the fact that at least eight of the plaintiff states have represented that they will continue to implement and fully comply with the Act’s requirements.” In other words, the Judge implied that since the states are proceeding to implement the law, including creating insurance exchanges, the actual harm is perhaps less than they have represented.

The impact could be significant according to Diane Cohen, Senior Attorney for the Goldwater Institute's Center for Constitutional law, which has filed its own lawsuit against the new law. Speaking to legislators today at the annual meeting of the American Legislative Exchange Council in New Orleans, she said, "Saying 'no' to a state exchange is absolutely critical to the success of our lawsuit and those pending elsewhere around the country."

As mentioned, Michigan’s Department of Community Health has already taken a number of actions to prepare the state for such implementation. Spokesperson Kelly Niebel described these in an email to CapCon:

“The Health Insurance Exchange Planning process began in February of this year with the establishment of five work groups focused on governance; finance, reporting and evaluation; technology; business operations; and regulatory and policy action… The work group process resulted in more than 50 consensus-based recommendations …. for the structure and composition of an Exchange governing board, potential financing options for the Exchange, an approach for certifying qualified health plans, and resolving gaps in technology infrastructure to support the Exchange, among many others. The work group process also resulted in the development of proposed legislative language for the establishment of an Exchange...”

(See “Michigan’s Obamacare Exchange ‘Work Groups,’” below.)

Although no exchange bill has been introduced yet in the Michigan Legislature, in a July hearing several Republican state senators expressed the opinion that the state has no choice. “(I)f we choose to do nothing, they will come in and run this health exchange,” said Sen. Joe Hune, R-Hamburg, as reported by the Gongwer news service.

However, it appears that a state exchange which meets extensive federal mandates would differ little if at all from one created by the federal government itself, except that its cost would be born by state taxpayers rather than national taxpayers (or lenders). An early read on these regulations was provided in July when the U.S. Department of Health and Human Services released its first round of state exchange regulations. The Wall Street Journal described the proposed rules as follows:

“The word ‘require’ appears 811 times in the 244-page rule and its 103-page supplement. ‘Must’ shows up 580 times—and this is merely HHS’s first batch of exchange mandates… The draft rules command that the structure of every exchange needs federal approval, much as in Medicaid, which in practice means an HHS veto of market-based innovation. State standards for the ‘certification, recertification, and decertification of health plans’ will also be subject to HHS. This means Washington will dictate rules about which insurers are allowed to sell plans in the exchange, and thus which insurers will continue to exist as viable commercial concerns. It also looks as if HHS will require the exchanges to enforce de facto price controls on premiums.”

In an email to CapCon, John Graham said this about Gov. Snyder’s decision:

“It would be a shame if Gov. Snyder implemented Obamacare when Republicans in Congress and other states have pledged to defeat it. If Obamacare is not repealed, one reason is that the President and its supporters will campaign next year on ‘bipartisan’ implementation in states where Republicans in power refuse to resist this unconstitutional take-over. Michigan’s taxpayers will be forced to finance the exploding operating costs of this new agency, which will operate under arbitrary and confusing rules promulgated by bureaucrats in Washington.”


Michigan's Obamacare Exchange "Work Groups"

One of the little discussed aspects of Obamacare is that a lot of special interests stand to make a lot of money due to its mandates, regulations, restrictions, etc. Also, that the Obamacare "exchanges" are themselves a large expansion of big government. The potential profits represent yet one more obstacle to those who would see the law dismantled. In a recent article, Michael Cannon of the Cato Institute said, "Even more ominous: Obamacare is already creating constituencies dedicated to its preservation. For months, the Obama administration has been writing checks . . . all with the goal of protecting Obamacare by making more and more people dependent on it."

Which special interests in Michigan will profit? The list posted below of all the "stakeholders" who have participated in the "work groups" convened by the Michigan Department of Community Health probably includes the majority of those in this state. Note that not every individual and organization on the list is necessarily one of the particular providers, consultants, insurers, information technology firms and others who stand to profit from the new law. Many probably are, however.

How were the "work group" members chosen by the Department? MDCH spokeswoman Kelly Niebel provided Capcon with this explanation:

In early January 2011, a diverse set of people and organizations whose expertise and knowledge aligned with that needed for the work groups was identified. Those individuals and groups represented the following health care stakeholders:



Health plans

Health professionals


Insurance brokers/agents


Local government

Long-term care

Mental health

Non-hospital safety-net providers

Pharmaceutical manufacturers

Public health


Vendors/information technology


An email was sent on January 25 from the state's consultants (HMA and PSC oversaw the planning process) to a list of health care stakeholders, organizations and associations representing the sectors listed above.

The email invited recipients to attend a kick-off meeting where they could learn more about the planning process and the work groups. The kick-off meeting, which was held on February 1, was attended by 146 people... Approximately 220 people ultimately expressed interest in participating in a work group. To ensure that discussions were meaningful and manageable, work groups were limited to 30 members each.

Broad stakeholder membership in each work group was ensured. In addition to the 30 voting members, staff from various state agencies served as non-voting subject matter experts on each work group. Finally, legislative staff members were invited to attend each of the work group meetings as non-voting members. Workgroup meetings were also open for the public to attend.


Michigan's Obamacare Exchange "Work Group" Members


Radwan Khoury -- Arab American & Chaldean Council (ACC)
John W. Freeman -- Health Care for Michigan
Mark Cook -- Blue Cross Blue Shield of Michigan
John Schmidt -- Blue Cross Blue Shield of Michigan
Nancy Hostetler -- Delta Dental of Michigan
Rory Lafferty -- Health Alliance Plan
David Cotton -- Health Plan of Michigan
Cynthia Williams -- MESSA
Bruce Miller Michigan -- County Health Plan Association
Karen Jonas -- Michigan Pharmacists Association
Colin Ford -- Michigan State Medical Society
David Seaman -- MHA
Dominic Siciliano -- Michigan Association of Heatlh Underwriters
Scott Hummel -- Michigan Association of Insurance Agents
Kay Harless -- NAIFA - Michigan
Marge Faville -- SEIU Healthcare Michigan
Tameshia Bridges -- PHI
Jeffrey L. Brown -- Oakland County Mental Health Authority
John Roy Castillo -- Cristo Rey Community Center
Kim E. Sibilsky -- Michigan Primary Care Association
Chris Allen -- Detroit Wayne County Health Authority
Bret Jackson -- The Economic Alliance for Michigan
John Valenti Sanofi -- Aventis US
Dean Sienko -- Ingham County Health Department
Richard Lichtenstein -- University of Michigan
Wendy Block - MI Chamber of Commerce
Chuck Hadden -- Michigan Manufacturers Association
Rob Fowler -- Small Business Assoc. of Michigan

Finance, Reporting, and Evaluation

Marci Hopkins -- Automatic Data Processing (ADP)
Ed Wolking -- Detroit Regional Chamber
Jennifer Werner -- Michigan Business & Professional Association
Judy Stewart -- American Cancer Society
Jan Hudson -- League for Human Services
Carol Diephuis -- Rogranna LLC
Andrew Farmer -- AARP Michigan
Patricia Langs -- consumer
Todd Anderson -- Blue Cross Blue Shield of Michigan
Nancy Wanchik -- Blue Cross Blue Shield of Michigan
Sharon Williams -- CareSource Michigan
Graham Smith -- HealthPlus of Michigan
Bill Fairgrieve -- Consultant to Ingham Health Plan
Dr. Barbara Horn -- AOA, MOA, ExpertEyes
Rebecca Blake Michigan State Medical Society
Mark Notman, PhD -- MSU College of Osteopathic Medicine
Kristi Belmore Bronson -- Healthcare Group
Cass Wisniewski -- Hurley Medical Center
Carolyn Miller -- NAIFA - Michigan
Jeffrey C. Thomas, CLU, RHU, REBC -- Small Business Assoc. of Michigan
Cheryl Streberger -- UAW Local 6000
Michael Vizena -- Michigan Association of Community Mental Health Boards
Patricia Anderson -- Health Care Association of MI
Kathy Humphrey -- Planned Parenthood West & North Michigan
Ned Simpson
David Moody -- Endo Pharmaceuticals
Dean Smith -- University of Michigan
Jim Rojeski -- Ingenix
Lynnette -- Rhodes L & S Associates Inc.


Roy Lamphier -- Detroit Regional Chamber
Duane Hopkins -- Innovative Corporate Solutions, Inc.
George Grund -- Michigan Business & Professional Association
Jackie Doig -- Center for Civil Justice
Elizabeth Adie -- Thompson Michigan Women's Commission
Glenn Ashley -- United Cerbral Palsy of Michigan
Richard Boehm -- Blue Cross Blue Shield of Michigan
Kristen M. Kangas-Kraft -- Blue Cross Blue Shield of Michigan
Brenda Laird -- Delta Dental of Michigan
Tom Lauzon -- Health Plan of Michigan
Dennis Smith -- Upper Peninsula Health Plan
Ellen Rabinowitz -- Wastenaw Health Plan
Taylor Scott, DO -- MOA EMR Committee
Jim Lee -- MHA
Karl W. Albrecht -- CEBS Action Benefits/MAHU
Charles K. May -- NAIFA - Michigan
Don Vroon -- Grotenhuis
Brian K. McNeill -- CMH for Central Michigan
Phillip W. Weaver -- Hope Network
Forest Goodrich -- Northwesst PIHP for Behavioral Health
Phillip Berquist -- Michigan Primary Care Association
Michele Strasz -- School Community Health Alliance of Michigan
Cynthia J. Mark -- Mark Consulting Group
Todd Lacksonen -- Eisai Pharmaceuticals Inc.
Sarah Mclain -- Advomas
Sashi Ravipati -- CNSI
Umesh Jadhav -- Deloitte
Jim Nye -- L & S Associates Inc.
Jan Ruff -- MAXIMUS

Business Operations

Elaine Coffman -- McGraw Wentworth
Jennifer Kluge -- Michigan Business & Professional Association
Larry Janicki -- MMA Service Corp
Scott Lyon -- Small Business Assoc. of Michigan
Linda Teeter -- Michigan Citizen Action
Randy Block -- Michigna Unitarian Universalist Social Justice Network
Gwen Williams -- MichUCAN
Kirk Roy -- Blue Cross Blue Shield of Michigan
Deidra Wilson -- Blue Cross Blue Shield of Michigan
Karen Green -- Delta Dental of Michigan
Carol Solomon -- McLaren Health Plan
Joseph Firestone -- MESSA
Craig Bass -- Molina Healthcare of Michigan
James F. Ford -- US Health & Life Insurance Company
Robin Reynolds -- Michigan County Health Plan Association/Ingham Health Plan Corp.
Craig Start -- Michigan Dental Association
Krista Matlock -- Spectrum Health Hospital Group
Michael A. Embry -- Comerica Insurance Services
Ryan Root -- Berends, Hendricks, and Stuit Insurance Agency
Robert L. Blackford -- Access Alliance of Michigan
David LaLumia Health Care Association of MI
Doug Paterson -- Michigan Primary Care Association
Debbie Brinson* -- Ingham County Health Department
Patrice Eller -- Center for Healthcare Research & Transformation
Deborah Whiting -- Greater Detroit Area Health Council
Patrick Stone -- PhRMA
Kyle L. Grazier -- University of Michigan
Cheryl Korpela -- Advomas
Phyllis Easton -- MAXIMUS
Regulatory and Policy Action
Kate Kohn-Parrott -- KKP Consulting LLC
Ken Pool -- Michigan Business & Professional Association
Delaney Newberry -- Michigan Manufacturers Association
Andy Johnston -- Grand Rapids Chamber of Commerce
Kathleen Johnston-Calati -- MI Disability Rights Coalition
Gary Benjamin -- Michigan Legal Services
Lynda Rossi -- Blue Cross Blue Shield of Michigan
Jayson Welter -- Branch Hillsdale St. Joseph Health Plan
Rick Lantz -- Delta Dental of Michigan
David Bilardello -- Priority Health Plan
David Livingston -- United Healthcare Great Lakes Health Plan
Stacey Hettiger -- Michigan State Medical Society
Michael DeGrow -- Michigan Academy of Physician Assistants
Laura Appel -- Michigan Health & Hospital Association
Catherine Cooper -- Michigan Association of Health Underwriters
Bob Pierce -- Michigan Association of Insurance Agents
Nick Ciaramitaro -- AFSCME
Hollis Turnham -- PHI-Michigan
Robert Sheehan -- Community Mental Health Authority of Clinton, Eaton, Ingam, Counties
Ben Robinson -- Rose Hill Center
Sarah Scranton -- Planned Parentood Affiliates of Michigan
Tomi Ogundimu -- Center for Healthcare Research & Transformation
Joan L. Moiles -- Retired OFIR
Kim Ross-Jessup -- Pfizer
G. Elaine Beane -- Michigan Public Health Institute
Robert Stampfly -- MSU Institute for Health Care Studies
Gilbert M. Frimet -- Foster Swift Collins & Smith, PC
Carl Alden -- Michigan Association of Chiropractors


See also:

Heritage Foundation Opposes Obamacare "Exchanges"

Health Insurance Exchanges in Michigan a Losing Bet

ObamaCare’s Michigan Collaborators

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.