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April 1, 2015

Fitch Credits MaineCare Reforms in Affirming Maine Bond Rating

Good news offers lesson for current budget deliberations

AUGUSTA – Fitch Ratings, a bond-rating agency, announced late Tuesday that they are maintaining Maine's "AA" rating for general obligation (GO) bonds and "A+" rating for general resolution bonds (GRB). Fitch specifically and prominently credited the state's management and reforms of its Medicaid program, called MaineCare, as a "key ratings driver" for the positive credit outlook.

From the report:

"In fiscal 2015, unlike in prior years, Maine has not seen significant mid-year budgetary pressure from the state's Medicaid program, MaineCare . . . . Several years ago, the state began implementing major changes to MaineCare including reduced eligibility and provider payments, and elimination of previously covered services. The Legislature's Office of Fiscal and Program Review reports MaineCare general fund spending through January 2015 as essentially flat to fiscal 2014 levels. To date, the administration reports MaineCare's budgeted savings targets are on track to be met."

"We are incredibly proud of the progress this Administration has made in stabilizing the MaineCare program after decades of unsustainable growth," said DHHS Commissioner Mary Mayhew. "This new approach will ultimately allow us to fulfill Maine’s obligation to its neediest elderly and disabled citizens."

Beginning in 2011, Governor Paul LePage implemented reforms that brought MaineCare eligibility for non-disabled adults in line with that of other states, reducing enrollment from a high of more than 354,000 in 2011 to a nine-year low of 287,000 in March 2015. The percentage of Mainers enrolled in Medicaid was nearly 50 percent higher than the national average in 2011; today, it matches the national average.

The Department of Health and Human Services (DHHS) also implemented a sophisticated MaineCare forecasting process that involves collaboration of employees from across the Department and utilizes a complex algorithm to assess past data, trend, and seasonality of Medicaid expenditures to accurately predict future outcomes of the program. No such forecasting effort existed at DHHS prior to the LePage Administration.

The Department's new hands-on approach to managing 800 frequent MaineCare member Emergency Department users has reduced their ED visits by 57 percent and per-member costs by 33 percent, saving taxpayers over $10 million to date. Increased utilization of primary care services within the Health Homes program has bent the cost curve downward and made a significant investment in Maine's future health care costs.

"This positive feedback from Fitch would not have been possible if we had been afraid to make serious changes in our Medicaid program, and especially if we had expanded Medicaid again to able-bodied adults," said Mayhew. "MaineCare and DHHS are on the right path, and the Governor's budget proposal keeps us on that path."

"Democrats yesterday proposed to increase DHHS spending without any corresponding cuts and to raise taxes to pay for it, and that is exactly the kind of policy that created the mess the Governor inherited in 2011," added Mayhew. "That behavior will only hurt Maine's bond rating and increase the cost of servicing Maine's debt, the burden of which ultimately falls on the taxpayers. Instead, Maine must continue to reform and prioritize its services in order to keep its Medicaid program sustainable."

The full Fitch Ratings report can be read here:

http://www.businesswire.com/news/home/20150331006639/en/Fitch-Affirms-Maines-GOs-AA-Bond-Bank#.VRvigPzF9xw