December 1, 2012

Questions surround Maine's Medicaid shortfall

The magnitude and timing of a $100 million shortfall stunned lawmakers on a state committee.

By Steve Mistler
Staff Writer

Overly optimistic savings initiatives, budgeting based on still-unapproved cuts and a failure to forecast health care claims are all contributing to a projected $100 million shortfall in the state's Medicaid program.

However, many questions remain about a budget gap that has been growing by an estimated $2.5 million each week since the current fiscal year began July 1.

Shortfalls are not uncommon in MaineCare, the state's Medicaid program. But the magnitude and timing of the latest one stunned lawmakers on the Legislature's budget-writing committee, which learned of it Thursday, six days before the swearing-in of the new Democratic majority.

Lawmakers didn't ask a single question when Health and Human Services Commissioner Mary Mayhew delivered the news. The queries began in earnest after Thursday's meeting and are likely to continue.

Mayhew is expected to present a more detailed analysis of the shortfall this month.

Frustration is mounting over the state's management of MaineCare, with a shortfall that equals about $77 for every Maine resident.

Worsening the scenario are budget issues that include a $35 million revenue shortfall in the budget that ends June 30 and a projected $880 million gap in the next two-year budget.

"Solving (the MaineCare problem) has to be one of the top priorities of the next legislative session," said Sen. Roger Katz, R-Augusta. "Providing health care to our most vulnerable residents is important, but all of these cost overruns at DHHS are crowding out other state spending priorities."

The department's $2.1 billion budget is 45 percent of the state's overall budget. The projected MaineCare shortfall represents less than 5 percent of the department's budget.

Mayhew will be the recipient of the most pointed questions. She is not the first DHHS commissioner to oversee sizeable shortfalls. But she has been criticized for presenting lawmakers with a $121 million budget gap last year and revealing this year that a computer glitch had given 19,000 ineligible Mainers access to MaineCare benefits.

Mayhew said Friday that the latest shortfall represents the state's ongoing battle with the MaineCare program.

"Not only is this problem not unique to this administration, it's not unique to this state," Mayhew said.

Mayhew blames much of the current shortfall on the federal government.

About $20 million of it comes from cuts that were passed in the last legislative session but still don't have federal approval. There were early warnings that some of the reductions -- about $10 million -- wouldn't get federal waivers, but Republican lawmakers, at the urging of the LePage administration, booked the savings in a party-line budget vote. The federal government has yet to grant permission for the reductions.

Mayhew said Friday that it wasn't a gamble to book the savings without federal approval.

"Our request to the federal government was to live within the means of our budget resources," she said. "We brought our challenges to the federal government. We are limited with what we can do. ... This is an entitlement program, it's not a capped budget."

The LePage administration argues that the Medicaid reductions are long-term structural reforms to rein in spending.

The current shortfall suggests there are problems besides Medicaid caseloads.

The outgoing Legislature made more than $100 million in Medicaid cuts. Reducing eligible MaineCare recipients was intended to lower costs, but that's not happening.

"It strikes me that we're still in this position after all that was done last session," said Sen. Dawn Hill, D-York. "I'm pretty sure that taking people off health care is not the answer to our budget problems."

Other causes of the shortfall include cost-saving initiatives that have not, and likely won't, come to fruition. "It's pretty clear that a portion of this problem is due to overly optimistic predictions," Katz said.

(Continued on page 2)

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