AUGUSTA — The federal government will allow Maine to make limited cuts to its Medicaid program, but not to the extent Gov. Paul LePage ’s administration sought last year as it looked to close a $20 million budget hole.
The state will book only a fifth of the originally projected savings as a result.
The federal Centers for Medicare and Medicaid Services notified state officials on Monday that they can cut about 12,600 low-income parents and caretakers from Maine’s Medicaid rolls and cut or reduce coverage for about 8,300 elderly residents who also qualify for Medicare and rely on Medicaid support to purchase prescription drugs.
The federal government, however, didn’t allow the LePage administration to cut coverage for about 6,500 19- and 20-year-olds or cut off coverage for as many parents and caretakers as the administration and Republican lawmakers had sought.
The state will make the prescribed Medicaid cuts starting March 1. And instead of the $20 million originally projected, the cuts will result in about $4 million in savings to the state, according to the Maine Department of Health and Human Services.
The state will again have to prove to federal officials that it’s facing a budget deficit in order to carry those cuts into the new fiscal year that starts July 1.
Health and Human Services Commissioner Mary Mayhew said the state has had to pick up a greater portion of Medicaid costs in recent years as federal economic stimulus funds have dried up and federal matching rates for state Medicaid spending have dropped. Maine has more generous Medicaid benefits than most states, she said.
“There are a variety of long-term efforts that we have under way to improve the utilization of services, to ensure greater accountability for high-quality outcomes. But those efforts take time,” she said. “And in the short term, the state has to balance its budget, and we have to stabilize the financial situation for this program and make additional changes in the size and scope of the program.”
Adrienne Bennett, a spokeswoman for LePage, referred all requests for comment to Mayhew.
In all, the cuts proposed by the state would have eliminated coverage for 36,000 residents. They were approved in the Legislature last year as part of two supplemental budget packages and originally were scheduled to take effect Oct. 1, 2012.
Maine Equal Justice Partners, an advocacy group for low-income residents that opposed scaling back Medicaid coverage, estimated the federal government’s decision will allow about 21,000 people — 14,500 low-income parents and 6,500 19- and 20-year-olds — to continue receiving coverage.
Maine officials asked the federal government to allow the state only to cover low-income parents whose income matched or fell short of the federal poverty level — which in 2012 was $23,050 annually for a family of four — a move that would have eliminated coverage for 27,000 people. Instead, federal officials allowed the state to scale back eligibility requirements to 133 percent of the federal poverty level from the current 200 percent.
The limited approval comes as the LePage administration prepares its proposal for a supplemental budget package aimed at bringing the current year’s budget into balance. LePage late last month issued a curtailment order cutting $35.5 million in state spending to keep pace with falling state revenues, and the supplemental budget package — expected Friday — will address a $100 million shortfall that has developed in the state’s Medicaid program.
The LePage administration had been building its supplemental budget proposal without counting on any savings from this round of Medicaid cuts, Mayhew said. “This is a positive development and will be helpful as we address our ongoing financial challenges within the Medicaid program,” she said.
Republican lawmakers and LePage administration officials pursued cuts to the state’s Medicaid program — called MaineCare at the state level — last year although many of the cuts appeared to be prohibited under the federal Affordable Care Act, the Obama administration’s 2010 health care law.
The Affordable Care Act — through a section of the law called “maintenance of effort” — largely prohibited states from scaling back existing Medicaid services in advance of the law’s major expansion of Medicaid in 2014. Medicaid is a joint state and federal program that provides health insurance for low-income and some disabled people.
Lewiston Democratic Rep. Peggy Rotundo, co-chairwoman of the Legislature’s budget-writing Appropriations Committee, said lawmakers were anticipating the Medicaid cuts wouldn’t come through and allow the state to balance its budget.
“The Democrats didn’t support these cuts from the beginning,” she said. “We felt they were fiscally irresponsible, immoral and illegal.”
Rotundo added that Democrats, along with advocacy groups like the AARP, were concerned by the federal government’s choice to allow Maine to scale back the prescription drug assistance programs for seniors.
Rep. Kathleen Chase of Wells, the ranking Republican on the Appropriations panel, said the federal government “needs a reality check.” Supporting such a large Medicaid program has become unaffordable for Maine, she said.
“There are some things we can’t afford,” she said. “We’ve expanded our benefits beyond the point that we can afford to pay for them.”
Courtney Jenkins, a spokeswoman for the federal Centers for Medicare and Medicaid Services, said in an email that federal law allows states “substantial flexibility when operating their Medicaid programs.
“While some of the changes proposed by the state of Maine are permissible, others are not consistent with federal law,” she said.
In seeking to scale back Medicaid coverage, the LePage administration relied on an interpretation of the U.S. Supreme Court decision in June 2012 that upheld the health care law as constitutional, but ruled it unconstitutional for the federal government to penalize states for not participating in the Medicaid expansion.
The LePage administration read that part of the ruling as a sign it could make Medicaid cuts through a routine Medicaid plan amendment. Former Attorney General William Schneider, whose two-year term ended Monday, had argued that the maintenance of effort provision was “part and parcel of the Medicaid expansion that was struck down” and pledged to take the federal government to court if it rejected Maine’s request to cut coverage.
However, in Monday’s letter to Mayhew, federal officials wrote that the Supreme Court’s June ruling “did not strike down any part of the Affordable Care Act.”
“[W]e do not agree with your assertion that the Court’s reasoning in NFIB implies that the [maintenance of effort] provision … is unconstitutional or that it would be unconstitutional for [federal Health and Human Services Kathleen Sebelius] to disapprove the proposed state plan amendments.”