Friday marks the start of the last year in which Maine can extend health coverage to 75,000 low-income adults through Medicaid while the federal government still covers 100 percent of the cost for most.
Gov. Paul LePage remains staunchly opposed, but Republican Sens. Tom Saviello of Wilton and Roger Katz of Augusta are reigniting the debate with a new expansion proposal. We hope they’ll persuade enough of their colleagues on what should be an easy sell: accepting millions in federal funds that could help many become healthier and more financially secure while boosting local economies that depend on health care dollars.
In particular, as policymakers struggle to address a burgeoning epidemic of heroin addiction, Medicaid expansion should be the first step in ensuring more people who need treatment can access it.
But the Medicaid expansion debate is likely to unfold in a predictable way.
In April, an analysis of Medicaid expansion’s potential effect on Maine’s budget projected a $26.7 million budget benefit in 2016 if the state expanded coverage. Department of Health and Human Services Commissioner Mary Mayhew dismissed it immediately.
“We don’t need to study what we’ve already experienced — that when you expand a program as Maine did, many, many more enroll than are ever estimated, and the costs are far greater,” she told MPBN.
With Medicaid, 2016 might as well be 2002 all over again for the LePage administration, no matter how different the circumstances.
Maine expanded Medicaid coverage a number of times in the late 1990s and early 2000s. It covered additional children from low-income families, more parents with low incomes and, for the first time, childless adults with incomes below the poverty level. Maine has since rolled back coverage for parents and childless adults, but many of them — about 15,000 parents and 60,000 childless adults — could regain it through the proposed expansion.
Mayhew has consistently highlighted the following about Maine’s earlier expansions: More childless adults than expected signed up, forcing Maine to cap enrollment; program costs exceeded their budget; Medicaid obligations ballooned to the point where the state accrued a sizable debt to its hospitals; hospitals’ uncompensated care costs continued to rise; and the state’s uninsured rate barely budged.
Aside from enrollment, however, there’s no exclusive causal link between Medicaid expansion and these results.
The hospital debt was in part a result of growing Medicaid enrollment, but also the result of reliance on an inadequate payment system and the need for Maine to settle a court case in 2006 with 21 hospitals. At the same time, health care costs were surging.
Surging costs also partly explain why hospitals continued to provide more uncompensated care throughout the 2000s. As U.S. health care spending rose almost 80 percent between 2000 and 2009, the insurance market shifted to plans with high deductibles that many couldn’t pay when they got sick. Recessions also left many without jobs and health insurance. To add to that, most Maine hospitals implemented more generous eligibility guidelines for free care, contributing to growth in the amount of care they provided without payment.
The LePage administration contends history will repeat itself if Maine expands Medicaid again. But that ignores the important differences between expansions today and in 2002.
The federal government is offering to cover a greater share of Medicaid costs than it ever has: It will pay 100 percent of expansion costs in 2016 for 80 percent of those eligible; long-term, it will pay 90 percent. When Maine expanded coverage in 2002, the federal funding rate was 66.22 percent. And there’s no precedent for the federal government to slash those rates; it has always looked to other areas of Medicaid to save money. Meanwhile, there is a precedent to help Maine determine how many people would be eligible for expanded coverage and sign up.
On uncompensated care, Maine can now look to the experience of states that already expanded Medicaid. After years of consistent growth, uncompensated care costs at hospitals in expansion states dropped 26 percent in 2014 (compared with 16 percent in nonexpansion states) as fewer patients lacked insurance. States have also started realizing budget savings, and the Maine analysis even projects savings for a high level of enrollment rarely seen in Medicaid history.
When it comes to Medicaid expansion, 2016 is not 2002.
