AUGUSTA — More than 20,000 low-income Mainers will lose health care coverage on March 1 because of Medicaid cuts sought by Gov. Paul LePage and approved this week by the federal government.
The U.S. Department of Health and Human Services issued a split decision on the LePage administration’s plan to eliminate health insurance for about 37,000 Medicaid recipients and save more than $20 million in state spending.
In letters sent Monday to Maine’s Health and Human Services Commissioner Mary Mayhew, the Obama administration approved a request to eliminate coverage for 12,592 working parents whose earnings are 133 percent to 200 percent of the federal poverty level – $30,657 to $46,100 a year for a family of four.
It also allowed the state to deny or reduce Medicaid health care and prescription drug coverage for 8,250 elderly and disabled adults in the Medicare Savings Plan. About 2,600 of those people will lose all coverage under the Medicare Savings Plan and Drugs for the Elderly programs, Mayhew said.
The federal waivers are considered unusual, if not unprecedented.
Federal officials rejected Mayhew’s request to cut Medicaid insurance for about 6,848 low-income 19- and 20-year-old Mainers.
They also turned down a request to cut health insurance for about 14,978 parents whose earnings are 100 percent to 133 percent of the federal poverty level – $23,050 to $30,657 per year for a family of four.
Of the $23 million in Medicaid cuts initially sought by the LePage administration, the approved federal waivers will save $4.5 million in the last four months of the fiscal year that ends June 30, according to the Legislature’s nonpartisan Office of Fiscal and Program Review.
The LePage administration asked DHHS Secretary Kathleen Sebelius for federal approval to help balance the two-year budget ending June 30. Lawmakers still face an estimated $95.5 million funding gap for the state’s Medicaid program, MaineCare.
Mayhew said Tuesday that she was glad that the federal government gave Maine some added flexibility to manage rising Medicaid costs but the state needs greater independence to make sure the program serves its core mission.
She noted that 700 Mainers with developmental and intellectual disabilities are on a waiting list for coverage.
“I don’t want to minimize the difficulty of this decision, but these cuts were legislatively authorized policy changes that were presented in the budget that was submitted by the governor,” Mayhew said. “We have to look comprehensively at managing the size and scope of the state’s Medicaid program to get it on a stable and sustainable path.”
The Medicaid reductions were approved by the Legislature in the spring to bridge a state budget shortfall. Opponents argued that some of the cuts were illegal under a provision of the Affordable Care Act that sets minimum coverage levels for Medicaid.
The Legislature, on a party-line vote with Republicans in the majority, used the unapproved cuts to plan savings in a supplemental budget, initiating a protracted public dispute between LePage and the Obama administration over whether the cuts should be allowed.
Two-thirds of the Legislature supported the proposal to eliminate coverage for parents earning between 133 percent and 200 percent of the federal poverty level in separate budget bill.
Because the Affordable Care Act is only a few years old, states and the federal DHHS are essentially plowing new ground.
To date, no states have been granted Medicaid coverage waivers from the Affordable Care Act. Three other states – Wisconsin, Illinois and Hawaii – would be eligible for the limited exceptions granted to Maine on Monday because they have actual or projected budget deficits, a DHHS official in Washington confirmed Tuesday.
In the Maine Legislature, Democratic and Republican leaders issued written statements Tuesday criticizing different aspects of the federal waivers.
“While Gov. LePage has permission to take health care away from seniors and people with disabilities, it doesn’t mean it’s the right thing to do,” said Sen. Dawn Hill, D-York, Senate chairwoman of the Appropriations Committee. “No senior should have to choose between filing their prescriptions or putting food on the table.”
Hill said Democrats will follow up with federal officials to better understand the decision.
“I am very disappointed with Secretary Sebelius’s decision on the Medicaid waivers,” said Senate Minority Leader Michael Thibodeau, R-Winterport. “While some of the Governor’s requests were granted, the refusal to authorize all of them will make it even more difficult to balance our state budget.”
U.S. Rep. Chellie Pingree, D-Maine, engaged in a public debate with LePage over the legality of the cuts. On Tuesday, she said the Obama administration did the right thing.
“Especially in this weak economy, now is not the right time to pull the rug out from under people who are struggling to get by,” Pingree said in a written statement.
Pingree is married to S. Donald Sussman, majority share owner of the Portland Press Herald.
Medicaid has emerged as one of the top fiscal concerns for states nationwide.
Maine was one of 10 states where spending on Medicaid and other health care programs was over budget, according to a survey of state fiscal officers released last month by the National Conference of State Legislatures.
States are bearing a bigger share of the cost than the federal government because of the absence of federal aid that was offered to states during the recession. In 2011, state expenditures on Medicaid nationwide increased by 22.2 percent while federal spending fell 7.1 percent.
In Maine, the overall Medicaid budget grew by less $16 million in the fiscal year that ended June 30, 2012, but the amount of state funding required grew from $526 million to $776 million, roughly 48 percent, Mayhew said.
Advocates for low-income families, seniors and others affected by the cuts reacted strongly on Tuesday.
“The LePage administration has been determined to eliminate access to health care for thousands of Maine families,” said Sara Gagne-Holmes, executive director of Maine Equal Justice Partners, in a written statement. “The U.S. Department of Health and Human Services has rightly rejected major parts of his plan as illegal.”
Lori Parham, state director of AARP Maine, said her organization is “deeply concerned” about the impact of the cuts on seniors and disabled people who are barely making ends meet.
“Older and disabled Mainers, many of whom are already struggling to pay fuel and food costs, must have access to their life-saving medications,” Parham said in a written statement. “Cutting the (Medicare Savings Plan) will be nothing short of devastating for many of Maine’s at-risk residents.”
All current MaineCare cases will be reviewed for other Medicaid eligibility, and members will receive letters notifying them of the change in benefits.
All questions about the reductions will be answered at (800) 977-6740, TTY 711.
Changes in the Medicare Savings Plan or Drugs for the Elderly will vary from person to person, Mayhew said. Staffing will be increased to answer questions at (800) 442-6003.
Washington Bureau Chief Kevin Miller and State House Bureau Writer Steve Mistler contributed to this report.
Staff Writer Kelley Bouchard can be contacted at 791-6328 or at: