Maine is expected to have nearly $130 million in surplus revenues during the two-year budget cycle that ends in 2019, according to the latest projects from the state’s Revenue Forecasting Committee.
That’s great news (but not entirely unexpected because the state regularly ends its fiscal years with additional money on hand). The money can go toward fulfilling a state law requiring the expansion of Medicaid, which was approved by voters last year.
Gov. Paul LePage, who vetoed expansion legislation five times, has laid out a set of standards for funding the expansion, which he said, during his State of the State address, he would “enforce” as state law.
The funding standards include not raising taxes, not cutting funds for nursing homes or people with disabilities, not taking money from the Rainy Day fund and not using gimmicks. The surplus funds identified by the Revenue Forecasting Committee meet these criteria.
According to the nonpartisan Maine Office of Fiscal and Program Review, it would cost the state $55 million to pay for the expansion in fiscal year 2021, the first year of full implementation. That year, Maine will receive $525 million from the federal government, which covers 90 percent of the cost of expansion. The $55 million figure represents 1.5 percent of a single year of state spending.
Simple math shows the benefits to Maine far outweigh the costs by nearly 10-to-1. Even without the revenue surplus, Maine can afford to expand Medicaid. The surplus simply makes it easier.
By expanding Medicaid, Maine will make insurance coverage available to 80,000 Mainers. These are people who work but can’t afford health insurance or their employer doesn’t offer it. They are not poor enough or do not have a disability to qualify for Medicaid without an expansion.
Extending health insurance coverage to these Mainers will allow them to access preventative care, vaccinations, addiction treatment, counseling and other needed care. Currently, many people without insurance put off doctor’s visits until illnesses or injuries become so bad they threaten their work and wellbeing. When they do seek care, it is more expensive. The cost of that expensive care is borne by hospitals and those with insurance as rates are raised to cover the cost of caring for the uninsured. In fact, a recent analysis found that private insurance premiums were about 7 percent lower in states that had expanded Medicaid compared to those that had not.
Medicaid expansion will also put Maine hospitals on more secure financial footing by reducing their uncompensated care and expanding their patient base. In many rural communities, hospitals are the largest employers.
Thirty-three states, many of them led by Republican governors, have expanded Medicaid. No state has undone its expansion, negating the false arguments that expansion busts state budgets, leads to tax increases and reduced care for the elderly.
There are many ways Maine can pay for Medicaid expansion, including within existing revenues without tapping the surplus. But, the predicted surplus should make the discussion around how to pay for extending health insurance to thousands of low-income Mainers much simpler.
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