For every dollar the state of Maine would spend on expanding Medicaid, the federal government would pay $9, under the terms of 2016 voter-approved measure.
But despite a pile of free government money, and studies that show Maine would save a significant amount of money in the long run, Gov. LePage has steadfastly refused to implement the expansion that 59 percent of Mainers approved, which would benefit 80,000 low-income adults.
There’s an ongoing lawsuit filed against the state by Maine Equal Justice Partners, and a Superior Court Judge is expected to force the executive branch to implement the expansion. It's Maine law, but the DHHS is denying new applications until funding is figured out, effectively killing implementation until the next Legislative session begins in January.
By then, Maine will have elected a new governor. Three of the candidates — Democrat Janet Mills and Independents Alan Caron and Terry Hayes — support the expansion.
Republican Shawn Moody does not. He called the expansion a “government bailout for insurance companies and hospitals” on a conservative radio show earlier this year. Later he clarified that he would implement the expansion so long as there’s “sustainable funding” — basically LePage's line — signaling that Moody might be just as stubborn as the lame duck governor about plans that raise taxes.
The next governor aside, pressure is on lawmakers in the House and Senate to craft a veto-proof funding bill that garners bipartisan support. The law cannot be vetoed, so figuring out how to pay for it will be the top priority for legislators next year.
According to an independent analysis from Manatt Health, a New York based economic consulting firm, in February of 2018, the estimated net cost to the state is projected to be $30.5 million in the state's 2019 fiscal year and $48.59 million in 2020. Based on the experience of states that havealready implemented Medicaid expansion, the Office of Fiscal and Program Review estimates that newly received federal funds would end up saving Maine as much as $25.6 million by 2021.
In other states that have had Medicaid expansion in the books for almost five years, the budgets still get balanced. Because federal Medicaid money absorbs a lot of health care costs those states were already paying prior to expansion, several studies, including one in the New England Journal of Medicine, found that nine Medicaid expansion states have reduced their state spending, not increased it, and concluded that those states do not regret implementing the expansion. All but 18 states in the U.S. have implemented Medicaid expansion, and an academic study from Health Affairs has reported that in those states “there were no significant increases in spending from state funds as a result of the expansion.”
So despite LePage’s strict demands of fiscal responsibility, cost really isn’t the issue here. The state could easily pay for its portion of the bill and legislators have already floated a number of funding mechanism ideas. Here are three of them.
Raising the hospital tax to 6 percent
This idea comes from Republicans, and we’re including it here because it will inevitably be an option legislators have to consider once they start a new legislative sessionnext year.
Most Republicans, including LePage, support raising Maine’s current hospital tax from 2.23 percent up to 6 percent, depending on each hospital's revenue.
“Since Maine hospitals stand to benefit the most from the expansion of Medicaid, this is a more than reasonable means of financing that program's expansion costs,” said Julie Rabinowitz, a spokesperson for LePage on Tuesday. “The Governor believes that Medicaid expansion will decrease both the amount of charity care and bad debt carried on hospitals' books, and that will offset the increase in the hospital tax to pay for Medicaid expansion.”
According to the National Conference of State Legislators, eight of the Medicaid expansion states have reported plans on using some form of a hospital tax to pay for their state’s portion of the bill.
Although LePage supports this plan, he has not brought it forward once before the Legislature this year, despite having the power and authority to do so.
Pulling from the General Fund
Speaker of the Maine House of Representatives Sara Gideon believes that Maine has ample money to pay for the expansion outright.
The state ended the year of 2017 with $111 million in revenue surplus, and currently has a record $1 billion in the General Fund (which is used to support most of state government, including measures passed in a referendum).
In a letter she sent last month to the national Center for Medicaid Services, Gideon noted that projected revenue growth for 2020 is $79.2 million, which demonstrates that Maine has enough money to fund the expansion in the future.
Currently, Gideon says, there’s more than enough to funds already appropriated to the state’s Medicaid account to fund the expansion for its first year.
“Due primarily to strong economic growth, Maine’s revenues are projected to grow at a pace that exceeds the projected cost of expansion, and actual revenues continue to exceed those projections,” wrote Gideon. “Maine has sufficient unappropriated surplus and reserves to cover any possible shortfall.”
Earlier this year, Maine received an additional $35 million in surplus revenue from tobacco companies, after a settlement spearheaded by Attorney General Janet Mills.
This money is currently sitting in the Fund for A Healthy Maine and Democrats say it could easily be used to fund the first year of Medicaid expansion.
California, Indiana, Montana, and New Hampshire all pay for a portion of their Medicaid bills by using increased tax revenues from cigarettes and alcohol.
Legislators introduced a funding bill that included $23.3 million of this tobacco cash and $31 million from the General Fund during a special session this summer, and it gained bipartisan support passing in both the House and the Senate. But LePage vetoed it, as he did six other Medicaid-related measures, and a handful of Republicans in the House were able to sustain the veto. Next year, with LePage out of office, the chances for a similar bill passing are greatly improved.
One Democratic lawmaker is committed to fighting for the expansion, but lamented the process which she considers a sign of a "sadly damaged government."
“The House Republicans made it very clear over the course of the 128th session that they would burn it to the ground rather than compromise,” said Rep. Tina Riley (D-Jay). “There is no bipartisan solution here because the divide isn't really about funding; it's about whether to implement the expansion or not.”