Maine’s Growing Medicaid Crisis

by Rep. Meredith Strang Burgess

Now that the massive federal health care plan is the law of the land, state legislatures are trying to figure how it will work. Here in Maine, a “select” committee of 17 legislators has been formed to help integrate the so-called Obamacare into the Maine system. As a member of the Health and Human Services Committee, I have been appointed to this new group.

The mission is to run a full analysis of the law and figure out the best ways to proceed to help Maine citizens and companies. I hope to focus on the positive parts of the program, such as tax credits for small businesses.

Overall, I had serious concerns about the new law because it does almost nothing to control health care costs. For example, there was no malpractice reform to cut down on the widespread use of defensive medicine, one of the engines driving costs relentlessly higher. Under Obamacare, medical costs and health insurance premiums will continue to surge, with no end in sight. If there was one thing Americans wanted from health care “reform,” it was lower costs. They will be sadly disappointed.

As with any piece of legislation more than 2,000 pages long – and which many members of Congress didn’t even read – there are hidden landmines everywhere. House Speaker Nancy Pelosi famously said, “We will have to pass the bill to find out what’s in it.” Well, folks are now finding out what’s in it; and it is clear that the economic impact on the states will be severe and very painful for taxpayers.

The new law promises to insure approximately 35 million people currently without coverage. However, about 15 million of them will simply be added to the Medicaid rolls. State Medicaid programs will be required to cover all residents who make less than 133 percent of the Federal Poverty Level (FPL), which is about $30,000 for a family of four. In other words, Americans who will find it increasingly difficult to afford their own insurance will have to pay higher taxes to cover free health care for millions of others. This is a major component of President Obama’s expressed desire for “wealth redistribution.”

For states that have been stingy about Medicaid, setting the qualifying threshold well below 133 percent of the FPL, the financial shock will be profound. Adding hundreds of thousands or even millions of people to their Medicaid rolls will throw states already near bankruptcy into economic chaos. California, with a $20 billion budget deficit, estimates that the Medicaid expansion will cost upwards of $5 billion a year.

Maine is way ahead of most states in providing Medicaid (free medical and dental care) to a huge percentage of its population. But the problems here are legion. Maine’s unsustainable Medicaid enrollment, now at 290,000, is about 20 percent of our entire population.

The dramatic growth began in the late 1990s. From June 1998 to June 2002, enrollment in Medicaid (or MaineCare, as it is known) grew from 154,000 individuals to more than 200,000. Governor Baldacci and the majority Democrats have added another 90,000 people, giving us the nation’s second highest percentage of enrollment based on population.

MaineCare costs state taxpayers more than $600 million a year, which is matched by about $1.8 billion in federal funds. Our costs per person run 90 percent above the national average, because MaineCare offers dozens of optional services not required by federal law, such as dentures and language therapy. We even spend $6 million a year giving free rides to heroin addicts going to methadone clinics; some of them take taxis and bill the fare to the taxpayers.

The recent history of Maine’s Medicaid program demonstrates the perils of such a reckless expansion. It has created a perpetual budget crisis, higher taxes, increased costs for medical services, underpayment of health care providers and rationing of care for people in the system. Many doctors and dentists are so exasperated by the underpayment of fees – or total nonpayment – that they no longer take Medicaid patients. We owe Maine hospitals more than $400 million for Medicaid services provided as far back as 2005. The hospitals respond by shifting the costs to people with private insurance, which drives their premiums even higher.

The problem with Obamacare is that our Medicaid program will be locked in place. Once the rules kick in completely in a few years, we won’t be able to change eligibility levels. In fact, we will have to add thousands of additional people to the rolls.

Here’s the rub. The state’s next biennial budget for 2012-2013 has a projected shortfall of $1.3 billion, or about 20 percent of all state spending. Roughly 80 percent of the budget consists basically of two things – Medicaid and state aid to local schools. To generate significant savings in Medicaid, we would have to tighten eligibility levels. But with that option now blocked by Obamacare, we will have only one place to go for the huge budget reductions we will need. For Maine schools, Obamacare could indirectly mean drastic cuts.