Higher demand for services, combined with lower repayment rates, puts hospitals in a bind.

Our mission is to provide the highest quality care for sick and injured patients. Central Maine Medical Center and St. Mary’s Regional Medical Center have been faithfully serving our community for over 110 years. Physicians, nurses and other health professionals provide care to several hundred thousand people each year. We treat each patient compassionately and professionally regardless of their ability to pay for their care.

Resources

Our continued ability to offer a comprehensive scope of clinical services and quality patient care is directly related to having adequate resources available to fulfill our mission. Hospital operations are financed almost entirely by charges to patients covered by private insurance, Medicare and MaineCare (Medicaid).

Most people would expect that each health plan should pay at least the cost of a patient’s care. Not so with Medicare and MaineCare. Both government programs pay hospitals far below the cost of care. MaineCare is already the worst offender, even before the current round of proposed cuts. Hospitals end up shifting patient care costs to private insurance plans to make up for underpayment (losses) from Medicare and

MaineCare. People with private insurance are already paying higher charges that are, in essence, hidden taxes being imposed by the federal and state government.

Budget Band-Aids

Maine has serious fiscal problems due in part from ongoing

MaineCare budget deficits. Hospitals have already felt the impact of the MaineCare budget problems as we were forced to absorb $58 million in MaineCare cuts last year and further cuts under the 3.5 percent Dirigo cost cap. The governor proposed another $25.5 million cut this month. Hospitals are anticipating a cut of a similar magnitude in the 2005 budget as next year’s budget already appears to be out of balance.

The latest idea being floated in Augusta is a “tax-and-match” program. The state would impose a “sick tax” on hospitals designed to generate additional federal Medicaid dollars. Supposedly, the amount of tax money will eventually be returned to the hospitals. A tax is still a tax.

When this was tried in the mid-1990s, there was a lot more tax than match. History has shown us that when state budgets get tight, the promised match is reduced. Even worse, the federal government may disallow the entire “tax-and-match” scheme, and Maine hospitals would be left with a $16 million tax. In any event, hospitals will be forced to pass along this new tax to the private insurance plans that is yet another increase or “hidden” tax on Mainers paying for their health insurance coverage.

Permanent solution

Parallel to growing budget deficits has been the growth of the number of MaineCare enrollees. Historically, about 10 percent of Maine’s population has been enrolled in

MaineCare (Maine’s Medicaid program). Enrollment has skyrocketed in recent years, growing from 175,000 in 2001 to 242,000 today. Both of our local hospitals are seeing more MaineCare patients than ever before. Another 75,000 Mainers become eligible to enroll in MaineCare in July. To put the growth of this program in perspective, 1 out of 4 people in Maine will be eligible for MaineCare as compared to one in 10 just a few years ago.

While we support the concept of providing coverage to more citizens, expanding eligibility while reducing budgets doesn’t make sense and is dangerous. We foresee a never-ending series of cuts to hospitals and other caregivers and the continued necessity to pass along these cuts to private insurers. Maine will also face never-ending MaineCare budget deficits. Arbitrary cuts to providers and budget gimmicks alone will not solve these problems.

Maine hospitals want to be part of a legitimate, permanent solution. We need to bring all health care stakeholders together to come up with a strategy that works.

In the meantime, there is a solution to the fiscal year 2004 and fiscal year 2005 MaineCare deficit problem. The federal government sent $53 million to Maine last year specifically targeted for relief from rising Medicaid (MaineCare) costs. The Legislature could use $8.5 million and a similar amount the next fiscal year of these federal dollars currently sitting in a state account to close this year’s budget gap.

Maine hospitals want to be part of the solution, but we can stretch only so far to cover rising costs and higher demand for our services while at the same time receive drastically lower payments. We can and we must do better.

James E. Cassidy is president and CEO of St. Mary’s Regional Medical Center. Peter E. Chalke is president and CEO of Central Maine Medical Center.

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