A Policy Agenda for Gretchen Whitmer and a Supportive Legislature
Michigan Governor Gretchen Whitmer isn’t likely to see many of the priorities that she campaigned on come to pass as long as both houses of the Michigan legislature stay in Republican control. There are some areas for bipartisan consensus that might come to pass like criminal justice reform, improving access to a talented labor force, and perhaps (dare I say it) road funding increases, but there’s simply no way that Speaker Lee Chatfield nor Senate Majority Leader Mike Shirkey are going to give her universal day care, free community college, or any progressive health care plan like a public insurance option. Regardless, I would still like to propose a few ideas that would improve the financial standing of the average Michigan resident, should she have a supportive legislature after Props 2 and 3 go into full effect in 2021.
Most of these ideas are based on the idea of making government work better for people who need help the most. If you read Gallup’s “Most Important Problem” poll, nearly all of the economic issues that people report can be translated into “lack of money”. Heating costs, corporate corruption, income inequality, unemployment, and even the deficit all stem back to “lack of money”. I like the idea of using government policy levers to help people increase their incomes or save money.
- Repeal Medicaid work requirements and instead pass presumptive eligibility — Work requirements for Medicaid are going to do nothing but kick people off of Medicaid (and that was their goal). We should do the exact opposite and instead have the Michigan Department of Health and Human Services automatically sign people of all ages who qualify up for Medicaid. The federal government pays for 64% of all Michigan Medicaid spending so the state gets more than we put in. Its estimated that with presumptive eligibility in effect, we would see an increase in the number of people with health coverage by about 200,000 and since per capita Medicaid spending in Michigan is $5230, that would bring in an additional $670 million federal dollars to Michigan hospitals annually.
- Crack down on wage theft — it’s estimated that low income workers in Michigan lose around $430 million dollars per year in lost wages due to whats called “wage theft”. This is when employers knowingly do not abide by minimum wage and overtime laws or literally skim off the top of employees’ hours and not pay them for hours worked when they go over 40 per week. I see this as a better alternative to raising the minimum wage or overtime threshold as it is cracking down on actual theft from people who need help the most. Raising the minimum wage or improving overtime thresholds have merit, but this would involve making sure that the bad actor employers pay what they owe their employees.
- Switch from an income tax to an employer side payroll tax — The Trump tax cuts capped the individual state and local tax (SALT) deduction, but left the corporate SALT deduction in place. Switching to an employer side payroll tax would keep the state level tax liability the same, while lowering everyone’s federal income, Social Security, and Medicare tax liability by about $1.6 billion dollars per year. This assumes that all employers lower wages by the amount of the employer payroll tax, which would be controversial, but adaptable if explained correctly. It would also increase federal spending on Medicaid, the EITC, and ACA tax credits resulting in a net gain for Michigan residents. One concern is that Michigan has many tax expenditures that people would miss out on if they didn’t file income taxes anymore, but these could be replaced with a $1,000 refundable tax credit for anyone with any income as to not harm seniors, the disabled, or workers with children. This would leave most people’s effective state tax liability at around 2.3% while giving some low income residents as desperate infusion of cash.
- Cap EITC filing fees — Most people have someone else do their taxes for them and many paid tax preparation sites charge exorbitant amounts to file the Earned Income Tax Credit. These tax preparation offices are also more likely to be set up in areas with high EITC usage. The State of Michigan should cap the amount that tax preparation offices can charge as some end up giving 13–22% of their EITC benefit to these offices.
- All payer rate setting for health and auto insurance reimbursements to hospitals — All payer rate setting would give the state the benefits of single payer while maintaining the multi payer system. The main cost benefit of all payer comes from all payers paying the same amount, the same way they would under a Medicare for All style system. This would eliminate a lot of the administrative costs at hospitals as much of what a hospital billing specialist does is look up how much a certain plan will reimburse them which costs a lot of time and money. If the payments were all the same and every insurer used a common payment system, then hospitals would spend less on administration and insurance companies would spend less overall since they would have greater bargaining power for how much to reimburse. The main reason that health care costs so much in this country compared to others is that private insurance companies don’t have as good of a bargaining position compared to a single entity like the government. If car insurance companies could also join into this fee schedule (they currently can’t bargain at all), the cost of caring for people involved in catastrophic car accidents would decrease and auto insurance premiums would either drop or stay the same. This would (hopefully) decrease health insurance and auto insurance premiums for consumers in the end, giving them more money in their pockets.