Maine debate over Medicaid expansion key issue for candidates in 2014

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“If I’m elected, on Day 1, I’ll be submitting legislation to the Legislature to cover the 70,000 Mainers, of which 3,000 are veterans, to expand access to health care under the Affordable Care Act because it’s the morally right thing to do. It’s a matter of priorities. This governor (LePage) chose to give wealthy individuals here in the state of Maine a tax break. This guy’s priorities are just in the wrong place. (Medicaid expansion) will actually help Maine tremendously,” Michaud said.

Center, Gov. Paul LePage, Republican, opposes expansion.

 From April 9, 2014 veto message on LD 1487:

“Unlike many other states being lured into expansion by the promise of federal deficit Medicaid dollars, we have been down this road before. We know how the story ends: broken budgets and the disabled on wait lists for services. We know the arguments — they’re the same as the last time — and we know the ruinous results of expansion. For the sake of the truly needy and Maine taxpayers, we cannot go down this path again,” LePage wrote.

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At right, Eliot Cutler, independent, supports expansion.

“I will request that the Legisalture move quickly to expand Medicaid and to accept the federal funds. I think not doing so is one of the dumbest decisions this governor has made while he has been in office. Not only do we have a moral obligation to do it, I believe in Maine we have a financial and economic obligation to ourself to do it,” Cutler said.

 

LEWISTON — Even though she once talked up an expansion of Medicaid in Maine, Mary Mayhew, the state’s commissioner for health and human services, said adding thousands to the rolls now could spell long-term disaster for the state’s budget.

Mayhew, an appointee of Republican Gov. Paul LePage and a former lobbyist for the Maine Hospital Association, said an expansion, even with the lucrative offer of 100 percent financing from the federal government for the first three years will eventually cost Maine taxpayers hundreds of millions of dollars.

It’s an issue voters may likely settle this November when they select the state’s next governor and decide who they want to represent them in the state Legislature.

The debate over Medicaid has gone unsettled in Maine for more than a decade, and has recently been made more complex with the passage of the federal Affordable Care Act.

Two of the three candidates running for governor in Maine have said accepting federal funds to expand the state’s Medicaid system would be one of the first things they would do if elected. 

Democrat Mike Michaud and independent Eliot Cutler have said they would support an expansion of the program that could add between 70,000 to 100,000 people to the state’s health care rolls.

It’s a position in sharp contrast to that of LePage, who has not only fought against an expansion but has also reduced, with the help of a Republican Legislature his first year in office, the number of Mainers eligible for free health care under MaineCare, the state’s Medicaid program, by about 30,000 people.

At the heart of the debate is whether expansion will save the state money in the long run or whether it will create a massive new and ongoing expense that will drag down Maine’s ability to invest in other critical programs such as public education, highways and bridges.

LePage has vetoed five bills that would have accepted the federal funds being made available under the landmark federal ACA program, known as Obamacare to the act’s opponents.  

Under the new law, the federal government would pay 100 percent of the cost for new enrollees for up to three years, gradually reducing the federal share to 90 percent after 10 years.

LePage unsuccessfully tried to negotiate a deal with the federal government that would allow Maine to expand its Medicaid program if the 100 percent match was guaranteed for 10 years. 

That request was rejected by federal officials. No other state has a similar deal.

Also central to LePage’s re-election campaign is his effort to pay off a nearly $500 million debt the state owed to 37 hospitals for services provided under Medicaid but were not paid for.

That debt, LePage and his allies say, was largely the result of an earlier expansion of MaineCare enacted in 2002. That expansion, which loosened income and other eligibility standards, allowed more Mainers, including childless adults, to access the program.

For it, then against it

Mayhew lobbied in favor of the 2002 expansion when she worked for the Maine Hospital Association, which continues to support an expansion under the ACA today.

But as DHHS commissioner, Mayhew is standing with LePage against expansion.  

The cost of other provisions in the ACA will already add large new burdens to the state’s budget, Mayhew said.

She also notes that for the first time in a decade, and largely because of LePage, the state’s Medicaid costs are under control and the department is able to plan ahead instead of managing by crisis.

With fewer people now in the program, the state’s total Medicaid expenditures will drop by about $30 million in 2014, going down from $2.512 billion in 2013 to $2.482 billion in 2014.  

“We’ve moved beyond bailing out the boat,” Mayhew said at a recent interview with the Sun Journal.

But even without childless adults receiving health care benefits, Maine’s Medicaid expenditures are forecast to climb back to about $2.510 billion by the end of fiscal year 2015.

Mayhew said new federal requirements for “Health Homes,” which align more Medicaid patients with primary care doctors, along with state initiatives aimed at increasing Medicaid reimbursement rates for nursing homes and other long-term care facilities, are also new and unaccounted for costs to the state’s budget. Health Homes alone will cost the state an estimated $15 million more a year starting in fiscal year 2017, according to DHHS’ estimates.

Also in the works are programs aimed at allowing individuals to live longer in their homes, a far cheaper alternative to institutionalized care, that will cost the state budget money that’s yet to be found.

Mayhew said the transition to programs aimed at either reducing overall Medicaid costs or transferring those costs to other federal programs, such as Social Security disability, are neither simple nor quick.

But to also add thousands of new beneficiaries to the MaineCare system would be setting the state up for a future financial disaster, Mayhew said.

“It will return us to the days of Medicaid bankrupting the state budget and failing to effectively reflect our shared priorities of providing care to our most critically ill, disabled and elderly populations,” she said.  

Mayhew also said lawmakers, “in the pursuit of federal matching dollars,” would be forced to divert funding from other DHHS programs now paid for 100 percent by the state in order to draw down the federal funds. Doing so will further erode services or add to already long waiting lists for many of the state’s most needy citizens, Mayhew said.

She also said estimates about how many would be added to the MaineCare rolls are likely to be inaccurate given the experience in other states that elected to expand Medicaid programs under the ACA. Another problem with expansion, according to Mayhew and opponents, is it will allow some employers to drop health care coverage for workers, who would be eligible for coverage under a MaineCare expansion.

She said LePage’s administration would rather focus on retaining jobs and “promoting job growth so people have access to employer-sponsored coverage.”

Mayhew said other states that expanded Medicaid, including California, Rhode Island and Arkansas, saw enrollment numbers and costs well beyond what was initially forecast.

Proponents of expansion point to the large share of federal dollars that would be pumped into the state’s economy — some estimate as much as $1 million a day in the first year of expansion.

They also say the savings hospitals will see from not having to provide as much care for the uninsured and those unable to pay for their care will translate into lower insurance rates for those who buy health insurance coverage on the private market.

But Mayhew said once the state is required to provide its 10 percent match under the ACA, the figure will cost the state budget $800 million over 10 years.

She also said the federal government’s support for expansion only covers the medical costs of eligible individuals but won’t cover the administrative costs the state would face in adding thousands to the health care rolls.  

She said there’s little doubt the state’s first experience with a Medicaid expansion in 2002 shows how unpredictable and costly adding thousands more to the rolls would be.

She said the current support for an expansion by the state’s hospitals, “is not rational.”

“I have told them they are wrong,” Mayhew said. She said she has a difficult time understanding why hospitals, which frequently complain about inadequate Medicaid reimbursement rates, would “quickly get back in line and advocate for another expansion.”

She said hospitals do better with the reimbursement rates paid by commercial insurance.

“When you ask them they will say they would rather see commercial reimbursement rates,” Mayhew said. “To see them advocating for further erosion of employer-sponsored insurance in favor of a system that fails to pay adequate reimbursement rates is not rational.”

Mayhew also notes that most of the state’s hospitals and many of its health care facilities that treat Medicaid patients receive increased Medicaid reimbursement rates, which are designed to offset the costs of the “uncompensated or charity care” they provide.

She said hospitals, which operate or own many of the physician practices that are required to provide care regardless of a patient’s ability to pay, have failed to acknowledge those enhanced reimbursement rates and continue to point to increased charity care costs without that important context.

Mayhew said access to care is a key argument for proponents, but access is available and largely funded by those enhanced reimbursement rates at these physician practices that are federally qualified and designated by the hospitals that own them to provide outpatient care.

She said the Maine Legislature had likewise passed a law that requires those physician practices to function that way.

“Because they are receiving an enhanced reimbursement rate, those practices need to serve all regardless of their ability to pay,” Mayhew said.

Speakers present and past

Speaker of the House Mark Eves, D-North Berwick, disagrees with Mayhew and LePage.

Eves, who sponsored the last bill that would have expanded Medicaid, said there is no financial rationale for not expanding Medicaid.

Eves’ legislation was modeled after a similar expansion embarked on by the state of New Hampshire this year, which saw the state accept the federal funds in a way that it would then use the money to pay private insurance premiums for citizens who would be newly eligible for Medicaid coverage.

The expansion debate, Eves said, ultimately boils down to competing political ideologies.

He and other Democrats consider adequate access to health care a basic human right, Eves said.

“The consequence of not expanding is that we have left a lot of money on the table, in fact a million dollars a day, that would have come into the state and hundreds of millions of dollars we would be able to book as savings in the future,” Eves said. “That’s not even to think about the actual impact on individuals that this affects.”

Eves said hospitals around Maine and other health care facilities are hurting financially because of ongoing increases in the care they provide that’s not paid for.

Had Maine seized the opportunity to expand Medicaid early, it would have been able to book savings while the federal government was covering 100 percent of the expansion costs, Eves said.

Those savings could have been applied to the other reforms outlined in the ACA for states around Medicaid, including those detailed by Mayhew that will come with or without an eligibility expansion.

“We didn’t do it for ideological reasons,” Eves said. “We should do, what other Republican governors have done across the country and I think it’s inevitable, that every state, just like with Medicare, every state will eventually expand. It’s just a matter of when. They should and we should. We should do it now and take full advantage of the 100 percent match the fed is putting forward for three years.”

Eves said the impact on human lives is ultimately what matters most.

“It’s the right thing to do. It’s the right thing to do for our people. It’s the right thing to do for our local hospitals. This should not be a political, ideological logjam. This just should be something we should be able to figure out to do together.”

On top of that, Eves and other proponents argue the expansion will result in 4,000 new health care sector jobs.

“It’s a no-brainer and it’s a shame the governor has made this an ideological battle,” Eves said. “For me, it’s health care and it’s a human right. It should not matter how much you make, that is dictating whether you should get health care services or not or the quality of those services. It really is a moral imperative that we should, as a state, provide health care to our citizens and that should not be dictated by how much an individual makes.”

Hospital debt disagreement

Republicans and Democrats also strongly disagree over how and why the state ended up with so much Medicaid hospital debt. Former Speaker of the House Mike Saxl, a Portland Democrat and the key architect of the 2002 expansion, said Republicans are wrongly blaming that expansion for the unpaid debt.

Saxl points out that his legislation, which funded the new costs with an increase to the state’s tobacco tax, was paid for. He said subsequent Legislatures diverted the tobacco funding to pay for other priorities.

“They diverted money from the tobacco tax and from the Healthy Maine fund and then realized things cost money,” Saxl said.

Republicans also fail to fully acknowledge other changes in law that have led Maine to a pay-as-you-go system for Medicaid, which means the state would never again acquire Medicaid debt.

Republicans also seem unwilling to accurately convey the history of the first expansion, which was done with support from Democrats and Republicans, Saxl said.

“It was not considered a party-line kind of thing and it shouldn’t be,” Saxl said. “The goal of our legislation was to create a diverse and broad coalition that understood both the moral and economic impacts of health care in Maine.”

The 2001 roll-call votes on the bill show the measure passed the state’s Senate with just six Republicans voting against it. While closer in the House, the vote, 80-34, there was also bipartisan support of the expansion.

“Our goal was to find a way to lower the health care inflation in Maine as a tool to attract businesses and growth and we think we took a great step in the right direction. We helped a lot of people join the economy that might not have otherwise done that,” Saxl said. 

On the current expansion, Saxl, like Eves, sees the failure to accept the federal funds as a missed opportunity.

“The important thing is this is a loss of economic opportunity in a state where we are suffering and we are lagging behind the rest of the country,” Saxl said. “The reason isn’t because of an expansion of health care, because, of course, (states) who have expanded access to health care are crushing us on job growth.”

Maine is the only New England state not moving forward with an expansion of Medicaid under the ACA, but the latest economic data on employment and wage growth for the region from the Federal Reserve in Boston suggests Saxl’s observation is only partly correct. 

All six New England states have trailed behind national employment growth, but Maine, Massachusetts and Rhode Island saw stronger employment growth than Vermont, New Hampshire and Connecticut, which saw the slowest job growth in the nation in 2013. 

Same baby, only bigger

State Rep. Robert Nutting, R-Oakland, who served as Speaker of the House in 2011 when the Legislature reduced eligibility for Medicaid by eliminating childless adults, said the 2002 expansion was proof positive the state could not financially sustain covering the health care costs for thousands more people. Nutting said an expansion under the ACA would result in the same unsustainable growth in costs.

“This is the same baby, we keep getting the same baby, but it just keeps getting bigger,” Nutting said. LePage’s administration, according to Nutting, has been the first in three decades to bring that spending back to a sustainable level.

At present, the state’s Medicaid costs account for about 23 percent of the state’s total budget, down from about 25 percent from the previous fiscal year but nearly double the 13 percent the state paid for Medicaid costs in 1998, Mayhew said.

“That money to support the program had to come from somewhere,” Mayhew said. She said it was either diverted from other state programs and agencies or reflects investments in education or infrastructure that just aren’t being made. The increase also reflects an increased tax burden for individuals and businesses.

“Our efforts to expand jobs and improve this economy is affected by the lack of these investments and increased tax burdens,” Mayhew said. “That discourages employers from either staying or locating in Maine as more resources are shoveled toward Medicaid.”

Mayhew said expansion proponents are not taking in the big-picture impact it could bring.

“The dots have not been connected about its broader implications for this state,” Mayhew said.

A spokesman for the Maine Hospital Association declined comment for this report, saying the organization did not want to appear to be endorsing one candidate or another.

sthistle@sunjournal.com

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