November 18, 2012

Maine Voices: Augusta deep in denial on Medicaid debt

By allowing the amount Maine owes to the state's hospitals to soar, the Legislature and governor are fueling a crisis.

By JON REISMAN Special to the Telegram

MACHIAS - The unpaid $500 million MaineCare hospital debt is Maine's version of an entitlement-driven debt and constitutional crisis. We are all Greeks now.

click image to enlarge

Maine Medical Center, shown here, and other Maine hospitals are owed $500 million in MaineCare reimbursements, an "obvious violation of the constitutional requirement for a balanced budget," says an economics and public policy professor.

2009 File Photo/Gregory Rec

MaineCare is Maine's version of Medicaid: means-tested health care entitlement spending. The unpaid hospital debt has been persistently and predictably growing through three governors and both Democratic and Republican majorities in the Legislature.

The debt is a direct and obvious violation of the constitutional requirement for a balanced budget, and a disturbing denial and dereliction of the governor's and Legislature's joint responsibility to ensure that actual spending does not exceed available resources.

There are two sections of the Maine Constitution that mandate a balanced budget.

Article IX, Section 14, prohibits the state from incurring long-term debt of more than $2 million without the vote of the people, except for temporary loans to be paid out of money raised by taxation during the fiscal year in which they are made and certain specified emergencies. Most of the $500 million hospital debt is well over a year old, and it was certainly never voted on by the people.

In addition, Article V, Part Third, Section 5, prohibits the use of proceeds from the sale of bonds for current expenditures. Then (and future) Attorney General Janet Mills ruled in 2009 that the unpaid hospital debt was a current expenditure. That attorney general's opinion was in response to a bill from then-Senate Minority Leader Kevin Raye to bond the outstanding hospital debt. The opinion was somewhat unusually copied to then-Gov. John Baldacci and the majority Democratic leadership.

The unpaid hospital debt first developed in Gov. Angus King's last years in office, and accelerated under Gov. Baldacci. Majority legislative Democrats sought to pay a rising health care entitlement bill with higher taxes. One such tax was overturned by a people's veto.

The debt continued to grow and became something of an issue in the 2010 elections, helping to usher in Gov. Paul LePage and a Republican legislative majority. Most, but not all, of the debt was paid off. Republicans sought to cut spending elsewhere and to amend the terms of health care entitlements.

Over the last year, the unpaid hospital debt has starting steadily growing again. Gov. LePage flirted with calling a special session last September to address the problem but unwisely demurred. Now we have both a debt and a constitutional crisis.

No one will admit to or do anything about an obvious and fundamental violation of the Maine Constitution. This denial over the unsustainability of the entitlement state cannot be allowed to stand.

It is relatively easy to understand why the Democrats have been in denial mode on the hospital debt for more than a decade. Under Gov. Baldacci and Democratic legislative majorities, Maine moved from one person in five under MaineCare to one person in four, and efforts to honestly recognize and pay for that shift were viewed as likely political suicide.

Under the Affordable Care Act (also known as Obamacare), the maintenance-of-effort requirement means (or was thought to mean) no backsliding allowed on Medicaid spending in advance of a 2014 expansion.

Gov. LePage and Attorney General William Schneider have chosen to interpret the U.S. Supreme Court's ruling upholding the Affordable Care Act as potentially nixing the maintenance-of-effort requirement in the name of federalism. That approach is likely as deeply in the denial ditch as the Democrats' 10-year record of allowing the hospital debt to develop and grow.

So what are the options to move us off this road of debt and denial? Professors can pontificate and write op-eds to sway public opinion and shame political leaders into honoring their oaths to support and defend the state constitution. I suppose it's possible, but recent comments on MaineCare and health care policy from Democratic legislative leaders and Gov. LePage suggest otherwise.

I believe that citizens who want to avoid this road to Greece are going to have to sue Gov. LePage and the Legislative Council in state or federal court if we want our political leaders to obey the constitutional mandate for a balanced budget. After a decade of bipartisan denial, no other path will likely succeed. As Gov. LePage has famously said: "If it is to be, it is up to me."

Jon Reisman (email: jreisman @maine.edu) is associate professor of economics and public policy and chair of the professional studies division at the University of Maine at Machias.

 

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