Finding other ways to pay for nursing home care could extend the political life of the Medicaid system, which already is consuming billions in state and federal tax dollars, even before the baby boom generation starts needing long-term care.

Maine is in a particularly vulnerable position, having the highest median age in the country and ranked fifth in terms of the number of people over age 65. Already 70 percent of the nursing home beds in the state are paid for by Medicaid.

While the entire country is facing an aging baby-boom generation and lower birth rates among its white population, Maine doesn’t have any of the balancing factors other states enjoy. Young people aren’t staying in the state, and Maine isn’t attracting immigrant populations, which tend to be younger and have more children.

On the Midcoast, which is attracting retirees from other states, the percentage of those over 65 is even higher. According to the U.S. Census, the Damariscotta-Newcastle area is the oldest community in Maine, and Lincoln is the oldest county, with 18.2 percent of its residents over 65. In sheer numbers, however, Cumberland and York counties lead the way.

“These phenomena are in all 50 states,” said Michael Montagna of the State Planning Office about the graying of America, but “some states have more of the offsetting phenomena.”

That means more of Maine’s healthcare dollars will be going to the elderly, and that care is expensive.

While 22 percent of Medicaid recipients across the country are elderly and disabled, their care consumes 75 percent of Medicaid dollars. In Maine, the elderly and disabled make up 26 percent of the Medicaid population and account for 62 percent of the spending. Maine’s total Medicaid budget, including state and federal matching funds, is more than $2 billion a year.

“We are facing a demographic tidal wave when you realize a substantial part of the benefits are going to long-term care,” former Gov. Angus King told a blue ribbon legislative commission studying ways to improve Maine’s Medicaid system, known as MaineCare.

King spoke last week to the commission, which has met three times this fall and hopes to wrap up its work in December. It is charged with reviewing and making recommendations regarding the quality, adequacy and effectiveness of the MaineCare program and its long-term financial sustainability. Some members already have said they want to extend the life of the commission for another year given the enormity of the task. The legislation creating the commission – sponsored by Rep. Darlene Curley, R-Scarborough, was amended in the Senate to limit its duration to 2005 instead of allowing it to meet over two years.

King, who is co-chairing a national committee that ultimately could recommend ways to trim tens of billions of dollars from the federal Medicaid budget, said most people don’t understand that Medicaid – set up as health insurance for the poor – has become the payer of last resort for long-term care. Baby-boomers don’t want to believe they’ll need long-term care – at least not in the traditional nursing-home setting – and then they think Medicare pays for it, he said. It doesn’t, except in very limited circumstances.

Medicare is health insurance for those over 65 and is paid for by taxes withheld from people’s paychecks, just like Social Security. There is no specific tax set aside for Medicaid, which provides healthcare for the poor. It is paid for out of state and federal taxes as part of the general budget. Nursing home care falls under Medicaid when the recipient runs out of money.

“Long-term care is almost certain,” King said. “We’re all going to need it.” The former governor said policy makers may have to consider establishing a separate tax to pay for it – like the Medicare or Social Security tax – or give incentives for people to buy long-term care insurance.

King said he had spoken with a woman in her 40s who “bought long-term care insurance as a present for her kids.”

Doing nothing, he said, is not an option because the Medicaid system is “unsustainable” and “the demographic wave that’s coming at us is gong to be really overwhelming.”

“Any program growing at double or triple the rate of inflation has to end somewhere,” said King, who during his tenure expanded Medicaid to include coverage of adults without children – a program that grew so rapidly it hit a $100 million federal spending cap and had to be closed to new enrollees earlier this year.

“There is greater and greater resistance to people paying taxes. Nobody knows where the limit is, but we’re close to it,” King said. “I fear we’re becoming an entitlement society where everybody wants benefits, but nobody wants to pay for them.”

Sen. Michael Brennan, co-chairman of the state’s blue ribbon commission, also suggested that as a society we need to look at end-of-life care, where procedures can be “profoundly costly that have virtually nothing to do with quality of life or quality of outcome.”

Those issues get at the overall costs of healthcare, which members of the commission agreed were driving the Medicaid costs.

“We’re fond of saying it’s a healthcare crisis not a Medicaid crisis,” said commission member Christine Hastedt of Maine Equal Justice, an advocacy group for Maine’s low-income residents.

King agreed.

“We have to recognize as a society that Medicaid and Medicare or private health insurance – all three of these are payment mechanisms,” reflecting a growing cost of healthcare. “There’s a little bit of shoot the messenger going on,” he said.

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