With talk of tanning beds, selling the Blaine House and other topics dominating the conversation in Augusta these days, I am concerned we are taking our eye off the ball.
We are about halfway through the legislative session and are yet to take substantive action on Gov. Paul LePage’s plan to pay the $484 million the state owes to Maine hospitals. Outside of passing a two-year budget, I believe it would be difficult to find a more important issue in front of lawmakers this session.
The massive debt was built up over a period of years, as the state continually gave the hospitals “IOUs” for treating Medicaid patients, in essence providing “free” medical care at the cost of Maine taxpayers. This has had a profound impact on the hospitals’ ability to pay their own bills, keep adequate staffing levels and carry out planned expansion plans.
Rather than continuing to pass this debt on to future legislatures, the governor has come up with a bold, innovative plan to pay off our hospitals. It calls for issuing a $186 million revenue bond that would be funded through future liquor sales. The payment to hospitals would trigger $298 million in federal matching funds.
The governor has also committed to releasing $105 million in voter approved general obligation bonds for transportation, conservation, and other projects. He is also supporting a $100 million government facilities bond to replace the Maine Correctional Center in Windham.
This plan makes sense for a number of reasons.
The hospital payment and bond packages would inject about $700 million into Maine’s economy, creating new jobs in health care, construction and other areas. Those new paychecks going out would, in turn, lead to increased consumer activity in Maine.
The revenue bond approach makes great fiscal sense for Maine. It would allow us to borrow at a very low rate (probably 3-4 percent). The debt from a revenue bond would not be reflected on the state’s books, which would protect our credit rating.
Now is the time to take advantage of the federal matching rate for the hospital repayment.
Back in 2010, the rate for Medicaid reimbursements was 75 cents on the dollar. Today it’s 63 cents. It is very likely that the longer we wait to pay the hospitals, the less we’ll get in the form of matching funds from the federal government.
It’s also the right thing to do. We have a moral obligation to pay Maine hospitals the money they are owed.
Many of the people I represent in Androscoggin County work at area hospitals. Here’s a list of how much those institutions are owed.
• Central Maine Medical Center, Lewiston: $50.2 million
• St. Mary’s Regional Medical Center, Lewiston: $28.8 million
• Mid Coast Hospital, Brunswick: $13.8 million
• Parkview Adventist Medical Center, Brunswick: $3.5 million
St. Mary’s hospital in Lewiston recently announced it would have to restructure and eliminate 25 jobs, largely due to the state’s inability to fully reimburse Medicaid costs.
At Central Maine Medical Center, administrators say they are unable to renovate the 30-year-old maternity and neo-natal unit for the same reason.
All over Maine, the same scenario is playing out at hospitals. Projects are on hold, workers are being laid off and positions are going unfilled while these vital institutions wait to get the money that is owed to them.
Gov. LePage has put forth a responsible plan to pay our hospital bill. The time to act on it is now.
Sen. Garrett Mason, R-Androscoggin, serves on the Legislature’s Veterans and Legal Affairs Committee.