State revenues are off again, pointing to a curtailment of $37 million, matching the decline from projections due largely to the sales tax – a leading economic indicator – and the corporate income tax.
These shortfalls are no surprise. Maine’s economy is stagnant, even as national indicators trend up, and when your economy isn’t growing, your tax revenue is shrinking. Maine’s unemployment rate, 1.5 percent to 2 percent below the national rate through most of the Great Recession, is now within a half-percent. As the nation grows, we don’t. And since the LePage administration insists on cutting public spending while banking on private sector growth that hasn’t occurred, things won’t get better soon.
But the shocker in the latest Appropriations Committee presentation was the LePage administration’s assertion that the Department of Health and Human Services is another $100 million in the red for the current fiscal year. That’s on top of $200 million in shortfalls the administration “discovered” in early 2012, which led to harsh cuts in last year’s supplemental budget, pushed through solely by Republican votes.
These miscalculations are mammoth. They total 15 percent of all DHHS spending. Shortfalls of that amount in any department point to one thing – managerial incompetence.
The administration has cranked out excuse after excuse for the unending shortfalls. It cites Medicaid match-rate cutbacks as federal stimulus spending expired -- legislation Republicans opposed. They cite growth in Medicaid spending in previous years. And they complain that federal authorities haven’t approved cuts to existing Medicaid programs – waivers never granted to any state, and which won’t be now, since the Affordable Care Act’s thrust is to expand Medicaid (and privately-insured citizens) to approach universal coverage.
The trouble with the administration’s excuses is that all these facts were known when it signed off on the budget 18 months ago. Yes, the match rate was down and Medicaid spending had been rising, but in submitting its budget totals, the administration certifies that, yes, this is enough money to run these programs.
There’s no excuse for botching the estimates this badly, particularly when it involves the largest state department, in terms of both state and federal funding.
Rep. Peggy Rotundo, lead Democrat and likely Appropriations co-chair in the new Legislature, said after the shortfall bombshell dropped that she hoped for “an in-depth analysis.” She won’t likely get one, for the administration seems utterly clueless.
Here’s what we do know. The shortfall isn’t occurring because more people are receiving health care. The caseload has growth less than 1 percent, and that doesn’t include the thousands Republicans could legally drop from Medicaid rolls, plus cuts in dozens of other programs, ranging from prescription drugs for seniors to Head Start for pre-schoolers. It doesn’t stem from paying off old bills to hospitals; those efforts were stymied by lack of year-end surplus.
The most logical explanation is that hospitals and other providers are billing for more procedures for the same number of patients, or possibly billing for more than was provided. This has happened in the federal Medicare program. As part of the transition to electronic records, hospitals are reclassifying procedures upwards to gain additional reimbursement. If that’s happening in Maine, it’s understandable. Cash-strapped hospitals are laying off employees in significant numbers.
Some of this could have been avoided if DHHS Commissioner Mary Mayhew hadn’t canceled a planned shift to managed care for Medicaid providers. Managed care, while imperfect, at least tries to ensure that patients, classified by age, health status and demographics, receive only as many procedures as expected. Providers don’t get more money by doing more procedures.
It’s doubtful that Mayhew, who has no credentials equipping her to manage an agency with 4,000-plus employees, could have carried this off, especially after she fired all top managers who understood the complex Medicaid program. She only got the job, transferring from her role as Paul LePage’s health care advisor, when he couldn’t locate a suitable candidate.
But it’s her other most prominent position to date – lobbyist for the Maine Hospital Association – that makes it unlikely she’ll press providers to justify billings.
Though it’s doubtful the Legislature will get to the bottom of the Medicaid mess soon, one step must be taken quickly. Democratic leaders should insist Mayhew be replaced with someone qualified to oversee DHHS, manage its programs, and explain its budget. It’s abundantly clear she can’t.
When Republicans ran the show, this wasn’t going to happen, but now it must. Democrats can safely brush aside LePage’s trivial complaints about “trackers” and ask him about something serious – restoring a DHHS with credibility and competence. It may be their first big test.
Douglas Rooks is a former daily and weekly newspaper editor who has covered the State House for 25 years. He may be reached email@example.com.