An objective look at the referendum to expand Medicaid, Question 2 on the November ballot, shows that it is a good deal for Maine and would improve both the health of our state’s people and our economy at a reasonable cost.
Question 2 would expand the state’s Medicaid program, known as MaineCare, to individuals with annual incomes at or below $16,643 and families with annual incomes at or below $22,412.
The federal government will pay 94 percent of the cost of expansion in the first year, with the federal share declining to 90 percent by 2021 and thereafter. The increase in state spending required for this expansion, by 2021, would be 5 percent more than what the state is currently spending on Medicaid. An estimated 80,000 Mainers would benefit from this expansion, according to the Legislative Office of Fiscal and Program Review.
Medicaid expansion is a rare opportunity for the state that would deliver a real and sustained positive economic impact. Its implementation would inject $490 million in new federal money into Maine’s economy in 2018 and 2019, with similar amounts going forward, according to the fiscal office. This economic stimulus is expected to generate 6,000 new jobs, according to the Maine Center for Economic Policy.
The impact would be broader than just the health care sector because a ripple effect of increased consumer buying power would benefit businesses in other sectors, as well. Further, because rural areas in the state have higher proportions of low-income uninsured people, the economic impact would be greatest in rural areas.
Opponents attack the proposed expansion as a “welfare” giveaway to able-bodied adults when, in fact, what it really does is give an opportunity for health insurance to those who aren’t offered health benefits through work and can’t afford the cost of individual insurance policies. Who among us would willingly give up our health coverage when a routine visit to a doctor’s office can cost more than $100 and a visit to the emergency room cost thousands? Why should hard-working Mainers have to go without health coverage just because they work in a business without health benefits, are self-employed, or work part time in several different jobs?
Opponents of expansion have distorted the record on Maine’s earlier experience with changes to the Medicaid program. When Maine previously expanded Medicaid, the state hired analysts every year of the expansion to comb through data to see if Medicaid was substituting for private insurance. They found no evidence that people were dropping private coverage to enroll in Medicaid. Studies in states that have expanded Medicaid in the past few years have found that employment has increased and new Medicaid enrollees report that their ability to find and retain work has improved as they get treatment for pre-existing conditions.
Maine’s earlier expansion of Medicaid has been cited as a warning that costs will inevitably spiral out of control. That’s a misreading of the data. Maine’s budget crisis experienced between 2008 and 2011 was a result of the worst recession since the Great Depression. Around 23,800 Mainers lost their jobs and the poverty rate in Maine increased from 12 percent to 14 percent.
The growth in Medicaid spending was primarily a result of more enrollment in traditional Medicaid, not newly eligible people under the previous expansion in the 2000s. This same phenomenon was experienced nationwide. Maine’s 4 percent growth in Medicaid spending during this period was right in line with the national average of 4.1 percent.
State revenues also plummeted during the recession, straining state spending across the board. The impact of economic cycles on state programs — decreasing state revenues just when need is highest — is an argument for maximizing access to federal dollars, a steady payment source through economic slumps.
Thirty-one states have already expanded Medicaid, and the evidence from these states points overwhelmingly to positive economic benefits from this program. Hospitals in expansion states have seen their levels of bad debt go down and their operating margins go up. States have added thousands of new jobs. The economic stimulus in the form of new federal funding increases state tax revenues and helps off-set the state cost of expansion.
This November Maine voters have an opportunity not only to help assure access to health care coverage to a wider segment of the Maine population, but to help expand Maine’s economic horizons. A “yes” vote on Question 2 is a vote to support your neighbors, businesses and hospitals.
Elizabeth Kilbreth is an associate research professor emerita in the Muskie School of Public Service at the University of Southern Maine in Portland. She is the author of the report “The Real Impact of Medicaid Expansion in Maine.”