By Zachary Gorchow
President of Michigan Operations
Posted: February 12, 2024 11:53 AM

Increases in spending for behavioral health clinics, maternal health, juvenile justice, cash assistance to the poor, a raise for non-direct care workers and a significant increase in Medicaid caseloads helped lift the Department of Health and Human Services budget by 5.5 percent under Governor Gretchen Whitmer's recommendation.

So significant were the increases Whitmer proposed for the 2024-25 fiscal year that the DHHS budget would still rise over the current year despite the removal of $347.4 million in one-time spending in the current year ($317.45 million General Fund). The current year budget was loaded with one-time projects.

By far the biggest increase in the governor's recommendation involves the anticipated number of people using Medicaid, both traditional Medicaid and the Healthy Michigan program. Whitmer's recommendation called for a $1.63 billion increase to accommodate caseload adjustment ($229.4 million General Fund).

Dominick Pallone, executive director of the Michigan Association of Health Plans, whose member insurers administer Medicaid and Healthy Michigan to more than 1 million residents, said he was looking forward to hearing more information about the reason for that large an increase.

"These are big numbers," he said. "The 1.6 (billion) isn't, in my opinion, abnormally large, but with all that's going on with Medicaid redetermination and the adjustments to caseload because of that and economic drivers in health care, such as personnel increases or pharmacy cost increases, we'll just work with the department and the Legislature to better understand it and make sure that that number is the right number."

The budget also includes several other changes to Medicaid. The $10 per month premium for all families with children under 19 in MIChild would be eliminated. A new program costing $30.5 million ($5.6 million General Fund) would be established to fund pre-release services to prisoners in their final 90 days of incarceration.

Part of the budget also involves the anticipated and already underway rebid of Medicaid and Healthy Michigan to the health plans that administer the coverage to more than 1 million. That process began in October.

The governor's DHHS budget recommendation describes the contract changes as budget neutral though they include some changes. The state will withhold 2 percent, up from 1 percent, of what it pays the plans. It uses those funds to reward those plans meeting outcomes the state seeks. There also will be a new requirement for all plans to reinvest 5 percent of their annual profits into partnerships with community organizations on efforts to address the social determinants of health.

Pallone said all of the new details were part of the bidding process and no surprise. He noted that the state's Medicaid contracts amount to 3 to 4 percent of its entire GDP.

"The writing's been on the wall for these things, and we look forward to them quite frankly," he said of the changes.

Beyond Medicaid, the biggest new spending item is the $193.3 million ($35.6 million General Fund) to expand the state's Certified Community Behavioral Health Clinics demonstration program. Some 75,000 residents now receive behavioral health assistance through these clinics. A briefing paper from the Whitmer administration said, however, clinics exist in just 21 of 83 counties.

The expansion could mean as many as 50,000 people can obtain services from the clinics. The state began the demonstration project in 2021.

The proposed expansion is the largest of $265 million ($70 million General Fund) to boost behavioral health programs. There also would be Medicaid reimbursement rate increases ($36.15 million all funds, $10.2 million General Fund) for services outside the prepaid inpatient health plan system, among other initiatives. A briefing paper said it would amount to a 33 percent increase to bring reimbursement in line with physical health reimbursements under Medicaid.

The governor proposed a wage increase for non-direct care nursing home staff of $0.85 per hour ($14 million, all General Fund). This is the raise direct care workers received in the current budget. No increase was proposed for direct care workers, who had hoped for a $1.50 increase in the current budget.

Another significant aspect of the governor's proposal was big increases in aid to the poor:

$108 million for summer Food Assistance for children, $120 per child, when they are not in school;

A $46 million increase for the Family Independence Program that the Whitmer administration called the most substantial changes to it since 1990 with a 35 percent increase in base monthly payments to families receiving cash assistance;

A $30 million increase for the State Emergency Relief program that provides emergency cash assistance for homeownership, utilities and home repairs to low-income households;

A 30 percent increase in the Michigan Energy Assistance Program that helps the poor with energy bills. The $15 million increase would be the first to the program since 2012; and

Ending birth expense recovery so the fathers of Medicaid-enrolled children born out of marriage no longer will have to make payments to the state ($13.7 million all funds, $4.8 million General Fund).

There are significant proposed increases for child welfare, such as $38 million to restructure rates on juvenile justice residential facilities to increase capacity.

There would be one-time spending of $35 million ($10 million General Fund) to implement the recommendations of the Racial Disparities Task Force.

And there would be a $26.6 million increase to continue expanding reproductive and maternal health programs ($23.7 million General Fund). Among the expansions are $14.2 million for statewide family planning services, $5 million for the Michigan Perinatal Quality Collaborative and $4.9 million for doula services.

Overall, the governor recommended $37.7 billion for DHHS ($6.71 billion General Fund, a 3.7 percent increase).

Rep. Christine Morse (D-Texas Township), chair of the House Appropriations Health and Human Services Subcommittee , said she was excited to see continued investments in areas like behavioral health, maternal health and child welfare.

She noted the increase in aid to the behavioral health clinics means a huge federal matching contribution.

"What we see is continued investment in what we started because what we started is still not enough," she said. "It's clear that 30 years of disinvestment in public health, specifically behavioral health resources, has left a big vacuum."

Morse overall was enthusiastic about the governor's proposal. Asked if she had any concerns, she said no.

"These are her ideas, and then we'll have our ideas, and the Senate will have their ideas," she said. "I'm just excited to get to work."

Rep. Phil Green (R-Watertown Township), the minority vice chair on the subcommittee, said he appreciated Whitmer's emphasis on the child welfare system and taking care of children.

Like most Republicans, Green said he had concerns with the budget's sustainability.

"Her focus on our residents has been refreshing and making sure that we are taking care of our pregnant moms and our unborn babies is of course something we can 100 percent agree on," he said. "The concerns are the age old question, 'how are we going to pay for this.' A lot of great things, it tickles a lot of people's ears: 'Hey, she's on our side.' But we have to make the dollars work."

Groups in the health care and human services worlds praised the governor's proposal.

Brian Peters, CEO of the Michigan Health & Hospital Association, said Whitmer's recommendation "checks the boxes hospitals and health systems need when it comes to crucial state funding." In a statement, he also praised the increases for maternal, infant and behavioral health. He lauded Whitmer as "a health care champion."

Monique Stanton, president and CEO of the Michigan League for Public Policy, called Whitmer's budget "people-centered" and especially praised the increases in financial assistance for the poor.

"Right now, Michigan has the 13th highest poverty rate in the nation, and our cash assistance program has been failing to meet the needs of the kids and families who rely on it. The governor's proposal to increase the payment amount for families will make the Family Independence Program more effective," Stanton said in a statement. "Bold action is needed now to support children, families and workers in our state, especially given that poverty is on the rise in more than half of Michigan's counties. The governor's budget provides a beacon of hope for Michiganders who are struggling, and we urge the Michigan Legislature to follow her lead."