Bad medicine, bad economic policy

The LePage Administration’s proposed $221 million in cuts to the Department of Health and Human Services budget threaten the health and well-being of 65,000 Maine seniors, children, families and disabled persons. At recent hearings, legislators heard testimony that put a human face on these numbers.

Kelley Cash, CEO of Maine Veterans Homes, told legislators his organization “would have to close permanently all six of its assisted living facilities for Maine veterans.”

“Today, the typical private non-medical institutions for the elderly [PNMI] resident is an 81-year old woman (70 percent) who has been widowed (89 percent),” Richard Erb, president and CEO of Maine Health Care Association told legislators. “What is especially troubling to me, after participating in good faith, is that DHHS has somehow made the leap from examining and changing PNMIs to their outright elimination.”

“My wife and [I] are on MaineCare and we are 75 and 76 years old,” Bernard Corbin of Waterville testified. “The only income we have is our Social Security. We go to [the] food bank every week. We have very little savings in the bank. I don’t know how we are going to buy medicine.”

Legislators were told that contrary to LePage administration’ assertions, Maine faces a health care crisis, not a Medicaid funding crisis.

They also heard that these cuts would further damage Maine’s fragile economic recovery.

The health care industry is a major economic engine and source of jobs in Maine, accounting for approximately one in four private sector jobs across the state. In Penobscot and Washington counties, approximately one out of every three private sector jobs is in the health care industry. State and federal Medicaid payments of $2.3 billion to 3,500 health care providers statewide in fiscal year 2011 directly and indirectly supported 40,526 jobs.

A Maine Center for Economic Policy analysis found that these cuts will result in the loss of nearly 4,500 jobs across all counties statewide, including more than 1,000 in Cumberland County alone. In addition to the devastating human costs, these cuts will have a chilling effect on Maine’s economy as we continue to dig our way out of the worst recession in 70 years.

Maine has lost more than 4,500 jobs since January 2011, according to the most recent Maine Department of Labor data. The job losses resulting from the proposed budget cuts to Medicaid will further worsen Maine’s employment picture and the prospects for future growth.

The cuts will also cause Maine to lose federal matching funds, costing the state’s economy hundreds of millions more. Under the new federal Affordable Care Act, cuts made now will likely mean Maine must spend more, not less, on Medicaid down the road. This is penny-wise and pound-foolish because people who lose their health insurance now will forgo treatment and cost more to cover when they reenter the program in 2014.

The LePage administration argues its proposal will merely bring Maine in line with national Medicaid enrollment numbers. In fact, because of the ACA, other states are actually moving toward the Maine standard. The new federal law will also provide subsidies to those who lose coverage and cannot afford private options.

Currently, there is no such alternative for the 65,000 people slated to lose coverage under the LePage administration’s proposal.

The loss of health care for 65,000 Mainers and the loss of nearly 4,500 Maine jobs are only the tip of the iceberg. The proposed cuts will also result in tremendous cost shifts as those who lose health care coverage show up at emergency rooms for more expensive treatment with the costs passed on to health care providers, insurers and premium holders.

The last time Maine faced a fiscal challenge of this magnitude was during the McKernan administration in the early 1990s. Policymakers averted crisis then with a bipartisan, balanced approach, one that considered both spending cuts and increased revenues. We need our leaders to adopt a similar mindset toward our current dilemma.

As the recent Bangor Daily News editorial said about the LePage administration’s proposal, “a lot more work needs to be done before any decisions about budget cuts can be made.” It will have devastating effects on real Mainers — working families, children, seniors and disabled individuals who will be denied critically important services. The proposed cuts will undermine programs for those hardest hit by the recession, cost thousands of jobs, shift costs and put our economic future at risk.

Slashing services and critical investments just when we need them most is not the remedy for our current problems. Working together with all options, including additional revenues, on the table is the cure Maine needs our leaders to prescribe in the New Year.

Garrett Martin is executive director of the Maine Center for Economic Policy.