July 3, 2012

Will Maine opt out of Medicaid expansion?

Some GOP governors intend to forgo the federal money, but LePage indicates the complex decision won't be made until after the fall election.

By Steve Mistler smistler@pressherald.com
Staff Writer

The U.S. Supreme Court's landmark decision last week to uphold the federal health care law affirmed the legality of President Obama's signature legislative achievement.

But an unanticipated aspect of the ruling has created uncertainty for states like Maine, which must decide whether to participate in the law's expansion of health insurance for low-income residents.

States didn't have much choice before the court decision. Expansion of Medicaid, known as MaineCare in Maine, was mandated in the Affordable Care Act as a way to increase coverage for 17 million low-income Americans, including an estimated 37,000 uninsured Mainers. States that didn't comply with the law's 2014 deadline to increase coverage faced losing all Medicaid funds.

The court struck down the penalty provision, effectively removing the federal stick to increase Medicaid eligibility. But the carrot – millions in federal money – remains.

The federal government will fund 100 percent of the expansion from 2014 to 2016, gradually declining to 90 percent after that. Accepting federal dollars, an estimated $1 trillion, may seem like a no-brainer, but Maine and other Republican-controlled states face ideological and political dilemmas.

Republicans in Congress have vowed to repeal the law and are urging GOP governors to fight its implementation on the state level. National reports indicate that at least 15 of the country's 29 Republican governors are leaning toward forgoing Medicaid expansion funding.

To this point, Gov. Paul LePage isn't among them.

The governor doesn't like the health care law, or Medicaid spending, which he successfully moved to reduce this year. State and federal officials are still reviewing whether the court ruling means that some cuts made by Maine this year still need a waiver from the Affordable Care Act – something no state has obtained.

Nonetheless, LePage has made no definitive statements about whether he will spurn the federal money and fight the Medicaid expansion. He told Capitol News Service on Tuesday that no decisions will be made until after November's elections.

"It's an incredibly complex issue and we're still assessing our options at this point," said Adrienne Bennett, LePage's spokeswoman. "We're in the process of analyzing what Medicaid expansion would mean for Maine."

LePage, who joined a conference call Tuesday with GOP governors to discuss the court ruling, isn't the only Republican governor who is hedging. New Jersey Gov. Chris Christie has been similarly non-committal, possibly reflecting the fact that New Jersey is one of six states that already are leading the nation in Medicaid expansion under the health care law.

Maine isn't quite as far along as New Jersey, but Medicaid eligibility increased when Democrats controlled state government before the Republicans' electoral sweep in 2010. The policy moves reflected the Democratic belief that Medicaid is an effective health care delivery system for poor Mainers.

The health care law advances that belief. It proposes that Medicaid cover nearly all individuals with incomes up to 133 percent of the federal poverty level. A single person earning as much as $14,856 a year would receive health insurance, and a family of three earning as much as $25,390 would be covered.

Maine Democrats and advocates for the poor say the federally funded Medicaid expansion is a good opportunity for the state. If Maine opts out, they say, taxpayers here will simply pay for expansions in other states, with no benefit for needy Mainers.

"I am hopeful" that Maine will go along with the expansion, said Sara Gagne Holmes, executive director of Maine Equal Justice Partners, a group that advocates for the poor. "I don't think this is a party-line issue. I think this is an issue of what makes the most fiscal sense for states to do. It's an incredible opportunity to cover our most vulnerable people with 100 percent federal dollars for the first (three) years, and over time it gets no lower than 90 percent."

The federal investment would save Mainers money because needy residents would no longer have to get charity care in hospital emergency rooms, she said. That care is often funded through higher premiums for those with private insurance.

The charity care argument could play a significant role in LePage's and lawmakers' decision-making, particularly if it's made by the Maine Hospital Association, the trade group representing the state's hospitals.

Data published by the American Hospital Association shows that uncompensated care – health care costs that hospitals absorb because people can't or won't pay – soared from a total of less than $5 billion to nearly $40 billion from 1980 to 2010.

A recent report by the Portland Press Herald showed that uncompensated care by Maine hospitals has doubled over the last five years, from $94 million to $194 million.

Jeffrey Austin, a spokesman for the Maine Hospital Association, said uncompensated care is a "significant burden, but it's just not fever-pitch like it is in states" with restrictive Medicaid eligibility.

Austin said increased Medicaid eligibility would decrease costs for uncompensated care, but hospitals often end up paying for expanded Medicaid programming through reduced federal reimbursements.

"It's great to have more people covered ... but the feds have to get the money for that somewhere, so they're cutting money for hospital payments," said Austin. He said payments to Maine hospitals have been reduced by $900 million over the past 10 years.

Still, Austin said, the association could advocate for the expansion.

White House Chief of Staff Jack Lew, in a recent interview on ABC's "This Week," said he is confident that most states will increase Medicaid eligibility.

"For those few that are slow to come in, they're going to have to answer to people why they're turning this down and why they're letting people go without coverage," Lew said.

But some states are pushing back on that argument. They say the federal government will pay administrative costs, but states will absorb the additional technological and administrative expense of the expansion.

State Sen. Richard Rosen, R-Bucksport, said Maine lawmakers should be skeptical of the expansion.

"The budget gyrations that we've been through since 2008 are a good example of how unpredictable it can be when you start with what appears to be a partnership (with the federal government) and are later left with requirements of being locked into a program," he said.

Rosen said that if Medicaid is going to grow, states should have flexibility to spend the money. His comment echoes GOP support for block grant Medicaid funding, an idea that Democrats fiercely oppose.

Other political factors also cloud the prospect of Medicaid expansion in Maine. Among them: a nationally coordinated effort by Republicans to end Obama's law and his presidency.

 

Staff Writer John Richardson contributed to this report.

 

State House Writer Steve Mistler can be contacted at 791-6345 or at: smistler@pressherald.com

Twitter: stevemistler

 

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