Mich. Candidate for Governor Pushes Health Care for All

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By Alex Ebert

One Michigan doctor is looking to expand his practice by about 10 million people.

Abdul El-Sayed, former health director for the city of Detroit, is running a campaign on a pledge to create the U.S.'s first universal health-care system in the Wolverine State.

The undertaking would be massive, requiring waivers from the federal government, buy-in from a Legislature recently dominated by Republicans, and increasing the state’s tax revenues by roughly 70 percent. But he says it’s the only prescription that makes sense because it would remove the cost on employers for providing health care and would relieve auto insurers in the no-fault state of massive medical bills.

“If everybody has health insurance we can stop asking auto insurance to be health insurance too,” El-Sayed said at a June 20 Democratic gubernatorial debate. “Because in Michigan we pay 82 percent more in auto insurance than the national average, in Detroit we pay 50 percent more than that, because we ask auto insurance to be health insurance.”

‘Heavy Lift’

The plan, which El-Sayed calls “MichCare,” would expand Michigan’s Medicaid program to cover every man, woman and child in the state. It’s something El-Sayed’s campaign spokesperson Adam Joseph told Bloomberg Law June 27 would be a “heavy lift” but the best solution for Michigan patients and employers.

The plan would make the state a single-payer insurer, but would allow private insurance companies to offer supplemental health insurance. While the state plan wouldn’t have copays, it would impose a graduated payroll tax (from 0.75 percent for lowest earners to 3.75 percent for the highest on all of Michigan’s roughly 4.9 million workers, raising about $798 million annually.

But in return Michiganders would see drastically reduced health insurance rates, no copays, and smaller auto-insurance bills. The campaign estimates families except for high earners would pay less total in the plan than they do now.

The proposal would also impose a 2 percent to 2.25 percent gross receipts tax on all business income above $2 million. El-Sayed said that “75 percent of businesses won’t pay a dime” under the plan, but analysis done by Bloomberg Law shows the gross receipts tax would raise about $22.9 billion annually, mostly from the state’s largest employers.

The plan would also require Michigan to move in a different direction and get federal approval. The state would need to seek a Section 1332 waiver to use Affordable Care Act funds to finance the coverage expansion and a Section 1115 waiver to allow Michigan to wrap its Medicaid and Children’s Heath Insurance Program into MichCare.

Even if El-Sayed beats his two Democratic challengers in the August Democratic primary and beats a Republican rival in December, he’d still have to get these policies enacted through a Legislature dominated by Republicans.

“This is very possible,” Joseph said. “We are the only developed country in the world that doesn’t have a system like this. In Canada people live two years longer and pay less for it.”

Industry Impact

El-Sayed’s plan is a shot directed at the private health insurance industry, which he frequently criticizes in debates and public statements.

Based on fiscal analysis of Michigan’s current tax code, health insurance claims alone exceed $37.5 billion annually in Michigan, and El-Sayed’s campaign says that the industry would be decimated by the plan.

“More people are insured, more small businesses are offering coverage, and premiums in the small group and individual markets are moderating. Medicaid enrollment is up,” Helen Stojic, spokesperson for Michigan’s largest insurer Blue Cross Blue Shield, told Bloomberg Law in a June 27 email. “There is robust competition here. The private health insurance market is healthy in Michigan, and we see no reason to dismantle it.”

The Michigan Health & Hospital Association “supports health care for all, paid for by all,” spokesperson Laura Wotruba told Bloomberg Law in a June 27 email.

But she added “with any proposal of this magnitude, the devil is in the details—and any proposal or legislation put forth by an elected official would need to undergo a rigorous review prior to our association taking a position on a specific initiative.”

The campaign claims that businesses large and small would benefit greatly from offloading the cost of health insurance benefits. A company with 40,000 employees and gross receipts of $900 million would save roughly $250 million, even considering the gross receipts tax, the plan estimates.

“One of the most arduous things a business has to do is go through the administrative and financial hurdles of getting their employees health care,” Joseph said. “What we’re saying to all business owners is, ‘Imagine a world where you don’t have to worry about that at all.’”

Request Health Care on Bloomberg Law