AUGUSTA — The LePage administration on Tuesday unveiled a plan that could lead to sweeping structural changes in the state’s Medicaid program while ending health care coverage for 65,000 people currently receiving it.

Gov. Paul LePage’s plan is designed to plug a new $120 million shortfall in the budget of the Department of Health and Human Services. The plan the governor released Tuesday would result in a major overhaul of the state’s MaineCare system and cut $220 million over the biennium.

LePage said the plan was designed to meet soaring enrollment in the system that is facing declining federal reimbursement. The administration said the cuts are targeted at optional services that go beyond federal standards.

Opposition to the plan was swift and forceful. Democrats and advocacy groups said the proposal was reckless and would result in only shifting MaineCare costs while increasing health care costs for everyone.

The administration estimated the proposal would remove 65,000 people from the system.

“This is a very, very difficult day for all of us,” said DHHS Commissioner Mary Mayhew. “This will have a real impact on many people in this state.”

Mayhew said the proposal was necessary to ween Maine off what the administration believes is a reliance on federal funding. LePage highlighted statistics showing that Medicaid represents 21 percent of all state funding, not quite double what it was in 1998.

The governor said the structural changes are needed; otherwise, the state would continue to see additional budget shortfalls at DHHS and “they’re not letting me print money,” he said.

Mayhew said Mainers must “end our unhealthy dependency on federal dollars.”

LePage noted that Medicaid enrollment in the state has grown by 78 percent between 2000 and 2010, while Maine saw a 7 percent decrease in population. He also highlighted the state’s increase in median age, from 38 in 2000 to 42.

“Not only are we getting older, we’re getting poorer,” said LePage, noting that Maine wages were below the national average.

Some of the proposals include axing the state reimbursement for health care for so-called childless adults and lowering reimbursement for independent providers of elderly and mental health care.

The latter, known as private, nonmedical institutions, often house elders who have lost or given up their homes but don’t reside in nursing homes. Advocates for the poor and elderly said eliminating the PNMI subsidy could force recipients into nursing homes.

The administration has been reviewing the PNMI subsidy through a stakeholder commission. Cutting it would save $47 million and more than $100 million in federal match money.

The governor said the proposal was designed to protect the elderly and mentally ill and target cuts at people who had a better chance of getting off the system. He proposed cutting funding for childless adults, which would save about $37 million.

The proposal would eliminate health care funding for 19- and 20-year-olds.

The administration also proposed cutting dental, occupational and physical therapy, adult family care and other services, as well as limiting access to brand-name prescription drugs.

The plan also cuts by more than 50 percent state subsidies for a Fund for Healthy Maine, which allocates money for a national settlement with tobacco companies for smoking prevention, prenatal and young children’s care, prescription drugs for the elderly and disabled, substance abuse prevention and treatment and school health programs.

The plan is included in a supplemental budget proposal that will be taken up by lawmakers when the Legislature convenes in January. It calls for cutting $120 million in fiscal year 2012 and another $101 million in 2013.

LePage hopes the plan will be adopted early in the session so the state can implement the changes in April and achieve maximum savings before federal reimbursement rates drop.

Several of the major provisions unveiled Tuesday were floated last year, but were spurned by lawmakers. Asked Tuesday if the Legislature had the political will to pass the plan, LePage said he was counting on it.

Opposition is expected to be fierce. Advocates for the poor said the cuts don’t address the need for health care.

“This is a cost shift,” said Ana Hicks of Maine Equal Justice Partners. “If this passes, we’ll see these people pop up in emergency rooms and out in the streets.”

Hicks said that while some MaineCare recipients would continue to receive benefits, rollbacks in drug and treatment plans would increase overall costs because recipients wouldn’t receive the treatment they need and their conditions could worsen.

Rep. Peggy Rotundo, D-Lewiston, said Democrats still needed a concrete analysis to see what was driving the budget shortfall.

“(LePage) is proposing sweeping changes to MaineCare that will impact every family in this state,” she said.

Republican leaders echoed LePage’s concerns about the unsustainability of DHHS spending.

Senate President Kevin Raye, R-Perry, said, “You don’t have to be a mathematical whiz to realize that explosive growth in MaineCare is unsustainable and that the chickens will come home to roost.”

House Majority Whip Andre Cushing, R-Hampden, said lawmakers had no choice but to address the problem now.

“It’s not going to get better if we kick the can down the road,” he said. “Either we address the issue now or we deal with a greater problem next year.”

Although much broader in its reach, LePage’s plan bears some resemblance to a proposal Gov. John Baldacci unveiled in 2004 to address a $127 million shortfall by cutting funding for some optional DHHS programs. The cuts drew massive public backlash as 1,500 people flocked to the Augusta Civic Center for public hearings.

Hearings on the LePage plan are expected to begin next week.

It’s unclear what will happen if Democrats balk and thwart the passage of a two-thirds DHHS supplemental budget. Republican leaders on Tuesday diverted questions about their willingness to pass a majority budget.

“We’re still looking for that (two-thirds budget) solution,” Cushing said. “If we’re going to institute these changes, we need to work collaboratively. You know, this isn’t a Republican versus Democrat issue. This is a fundamental problem that other states are facing.”

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