Program: Director and other unclassified departmental administration

 

Appropriation:

Federal Funds:

$6,303,500

 

Special Revenue Funds:

$1,579,800

 

GF/GP:

$19,667,400

 

Total:

$27,550,700[4]

 

Program Description:


The appropriation funds administrative work by the Family Independence Agency.

Recommended Action:

With the elimination of approximately 6.3 percent of the Department of Community Health comes the ability to downsize the management of this department commensurately, producing a substantial savings of approximately $1,735,694.  This is an estimate only, and a detailed analysis of the impact of programs reductions is needed to determine exact savings.  Savings:  $1,735,694.

 

Program: Certificate of need  

 

Appropriation:

Interdepartmental Grants:

$101,600

 

Special Revenue Funds:

$620,300

 

GF/GP:

$222,900

 

Total:

$944,800[5]

Program Description:

This appropriation funds the Certificate of Need (CON) program.  This program is industrial policy for healthcare. Under the CON program, the state decides who may build new buildings, buy specified new pieces of equipment, or offer new and expanded medical services.  For example, every healthcare facility (such as a hospital, nursing home, or outpatient surgical clinic) that wishes to increase its number of beds, buy another facility, or expand its building must get a CON certificate from the state. Under the CON program, every facility that wishes to establish a neonatal intensive care unit, purchase a magnetic resonance imaging (MRI) machine, or create an air ambulance service must petition the state and obtain permission, in writing, before proceeding.[6]

Recommended Action:

This program should be eliminated.  The original idea behind CON is that it would prevent wasteful spending, but the result is that it negatively affects healthcare. It hinders hospitals’ ability to operate more efficiently by using economies of scale, something common in other businesses. It also effectively sets a price limit on medical services.[7] Furthermore, there is some evidence that CON regulations increase mortality among the elderly by limiting hospitals’ abilities to use new equipment.[8]   The certificate of need program requires 13 administrative positions, and costs the state $944,800.  Savings: $944,800.

Program: Rural health services

Appropriation:

Federal Funds:

$600,000

 

GF/GP:

$126,000

 

Total:

$726,000[9]

Program Description:

This appropriation subsidizes the Michigan Center for Rural Health. The center, based at Michigan State University, aims “To coordinate, plan, and advocate for improved health for Michigan’s rural residents and communities through creative visionary education, service, and research …”[10]

Recommended Action:

This program should be eliminated.  Rural residents may indeed have fewer choices in buying goods or services compared to their urban or suburban counterparts.  For example, cable television service is not available in many rural areas, and world-class research hospitals typically are not located in counties whose population is under 10,000. On the other hand, rural residents may enjoy amenities not available to people who live in more densely populated areas, such as less congestion and easy access to outdoor recreation. Tradeoffs are inevitable in the choice of where to live, and the state could minimize the extent to which it shields individuals from the consequences of their own choices.  Savings: $726,000.

Program: Michigan essential healthcare provider program

Appropriation:

Federal Funds:

$725,000

 

Special Revenue Funds:

$150,000

 

GF/GP:

$574,100

 

Total:

$1,449,100[11]

Program Description:

This appropriation funds the Michigan essential healthcare provider program.  The program offers up to $25,000 per year to physicians and dentists who provide medical services to areas designated as “underserved” by the medical community for the repayment of school loans.  In fiscal year 2001, the program placed 36 medical providers and 5 dentists.[12]

Recommended Action:

This appropriation should be eliminated.  It is true that healthcare options — as well as many other services — are more limited in rural areas than suburban and urban areas, but this in no reason to subsidize access to health care in rural areas.  The true cost of and access to healthcare services should be part of a person’s or business’ location decision.  If shortages do exist, private groups such as medical associations and community organizations should address them independently of government.  These grants perpetuate the image of rural communities as dependent on the largesse of urban and suburban residents. Doctors and dentists are important, certainly, but so are lawyers, plumbers, and hairdressers. We do not have state programs to attract other professions to rural areas, and we do not need such a program for doctors or dentists. [13] Savings: $1,449,100.