2012 Election: Results Snapshot 1 President Obama over Romney U.S. Senate (1 seat) Stabenow over Hoekstra New breakdown: 55 Democrats (2 independents) - 45 Republicans U.S. of House Representatives (14 seats) Two new members to Michigan Delegation (Dan Kildee and Kerry Bentivolio) House remains controlled by Rs ( ), MI Delegation 9R,5D)

Federal Funding - Fiscal Cliff Deal The American Taxpayer Relief Act of 2012 Payroll tax cut and “Obama/Bush tax cuts” expire Rich pay more in taxes; capital gains and dividends ($400k singles, $450k married couples) No increase on debt limit ($16.394t) 1 year UI extension 1 year “Farm Bill” fix 2

Fiscal Cliff Deal – Health Care 1 yr. Medicare physician payment fix ($25b) –Paid for (in part) by hospitals Documentation and coding offset ($10.5b) Medicaid DSH reductions ($4.2b) Other Hospital-related extensions ($5b) –Ambulance add-on payments, low-volume adjustment add-on, Medicare-dependent hospital program 2 month delay on sequester contained in previous debt ceiling deal –Including 2% cut to Medicare 3

Fiscal Cliff Deal – Conclusion 4

Looking Ahead – U.S. America is a deeply divided country Grid-lock will continue –The Senate will be controlled by the Democrats and the House by the Republicans –As is the case in Michigan, the only way to accomplish anything is to elect a House. Senate, and executive (president or governor) of the same party. Impact on the Affordable Care Act (Obamacare) –Will now be fully implemented with the re-election of President Obama Debt issues will continue to dominate

2012 Election: Results Snapshot 6 State House of Representatives (110 seats) Republicans maintain majority (59-51) Five incumbents defeated (all Republican) MI Supreme Court: maintains 4-3 conservative majority Justice Stephen Markman (R), Justice Brian Zahra (R) & Dean Bridget Mary McCormack (D) elected This just in: Justice Diane Hathaway (D) to step down Jan. 21. Gov. will appoint her replacement Six ballot proposals

Six Statewide Ballot Questions Proposal 1 - Emergency Manager Law Repeal –Repealed 48% Yes/ 52% No; Re-done by during Lame Duck Constitutional Amendments (All Defeated) Proposal 2 - Collective Bargaining – prohibit regulations –58% Yes/ 42% No Proposal % Renewable Energy sources by 2025 –37% Yes/ 63% No Proposal 4 - Collective Bargaining - home health care –43% Yes/ 57% No Proposal 5 - Two-thirds Supermajority Vote for Taxes –31% Yes/ 69% No Proposal 6 - International Bridge – 40% Yes/ 60% No

Conclusions - Michigan Big winners: –Debbie Stabenow –Governor Snyder Wins big by defeating all the proposals Wins big by helping Republicans retain majority in House Wins big by helping Republicans retain majority on the Michigan Supreme Court –Big losers: Bob King and labor Matty Maroun and his bridge

Lame Duck Highlights - Michigan Right to Work complicates everything –Michigan becomes 24 th RTW state; over 10K people rally against –Fastest time I’ve ever seen a bill become law Emergency Manager Law Repeal Redo Personal Property Tax Reform Election Recall Reform Detroit Lighting Authority Regional Transit Authority 9

Lame Duck Highlights – Health Care Governor shows veto “muscle” –Blue Cross Blue Shield mutualization (abortion language inserted by House) –CCW Exemption (no options for public venues, including hospitals) Medical liability reform (2 bills, mainly technical) Right to Life –Strengthen laws against coercive abortions –Strengthen regulations on facilities who perform abortions –Regulation on the disposition of fetal remains Health Insurance Exchange goes down in flames –State-based exchange and planning grant funding –Gov. to move forward with state-fed partnership No activity on Auto No-Fault, Certificate of Need or Conscientious Objection 10

Key Players in the 97 th Legislature Governor Snyder Senate –Majority Leader Randy Richardville (R-Monroe) –Majority Floor Leader Arlan Meekhof (R-West Olive) –Appropriations Chair Sen. Roger Kahn (R-Saginaw Twp.) –DCH Subcommittee Chair Sen. John Moolenaar (R-Midland) –Senate Health Policy Chair Sen. Jim Marleau (R-Lake Orion) –Senate Minority Leader Gretchen Whitmer (D-East Lansing) 11

Key Players in the 97 th Legislature House –Speaker Jase Bolger (R-Marshall) –Majority Floor Leader Rep. Jim Stamas (R-Midland) –Appropriations Chair Rep. Joe Haveman (R-Holland) –DCH Subcommittee Chair* Rep. Matt Lori (R-Constantine) –Health Policy Chair* Rep. Gail Haines (R-Lake Angelus) –Minority Leader Tim Greimel (D-Auburn Hills) –Minority Floor Leader Rudy Hobbs (D-Southfield) 12

Looking Ahead to the Upcoming Session Governor will begin to shape the discussion during SOS –Blue Cross Blue Shield mutualization redo –Road funding –Educational Achievement Authority –State budget discussion begin quickly Affordable Care Act –It will be implemented in Michigan –Conservative Republicans are still likely to fight it at every turn now that they view themselves as the last defense Other Health Care Issues –Auto No-fault –Nursing Issues; Scope of Practice and CRNA Opt-out –CCW, Conscientious objection likely back in some form –Certificate of Need; Fee increases, potential end-runs 13

FY Preliminary MHA Medicaid Priorities Support state Medicaid expansion Increase Medicaid rates to Medicare level Maintain GME at FY 2013 level. Maintain outpatient funding at cost for small and rural hospitals Increase DSH funding Limit state retention from provider taxes Claims tax—expires 12/31/13 14