Michigan Legislature extends health claims tax

Michigan Legislature votes to extend health insurance tax 4 years, leave shortfall unresolved

Associated Press

LANSING, Mich. (AP) -- Michigan lawmakers have voted to continue a 1 percent tax on health insurance claims that helps pay for medical insurance for 1.9 million low-income residents in the state.

But legislation given final approval Wednesday by the Senate doesn't address the problem that the tax is bringing in $130 million a year less than expected.

The tax took effect 17 months ago and is due to expire at year's end. The measure headed to Republican Gov. Rick Snyder extends collection of the tax through 2017.

If legislators don't find a long-term fix, Michigan could lose $400 million in a Medicaid match from the federal government.

To make up the Medicaid shortfall, Snyder is proposing to add a $25 per vehicle fee to auto insurance premiums.

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