LePage Administration Introduces Supplemental Budget Addressing Medicaid Shortfall

December 6, 2011

For Immediate Release: Tuesday, December 6, 2011
Contact: Adrienne Bennett (207) 287-2531
John Martins (DHHS) (207) 287-5012

Governor LePage’s proposal brings Maine closer to national average

AUGUSTA – On Tuesday, Governor Paul LePage introduced a supplemental budget proposal which concentrates on structural problems within the Medicaid program at the Department of Health and Human Services (DHHS) and takes the State through the end of fiscal year 2013. A thorough analysis of fiscal year 2012 has exposed a shortfall of $120 million and an additional $100 million in 2013.

In a bipartisan effort, the Governor met with Democrats and Republicans Tuesday afternoon to unveil details of the new plan emphasizing the importance of addressing over-budget spending within Medicaid. The Governor’s proposal includes restructuring eligibility, re-designing benefits and adopting payment reform which addresses those structural problems and will put Maine’s Medicaid program on a path to financial accountability.

“It’s critical that Maine has a safety net for our most vulnerable – the elderly, disabled, and children – who need it most. But it is just as important that this safety net ensures quality access,” says Governor LePage. “We must restructure the Medicaid program keeping in mind our most vulnerable and what the State can afford.”

Medicaid in Maine provides government-run healthcare, a program that has grown beyond the State’s financial means. It has created increased costs for medical services; underpayment of health care providers; debts to hospitals from years of unpaid Medicaid bills; and rationing of care for the people on Medicaid. Additionally, access to providers has significantly diminished over the years as providers have closed their doors to Medicaid patients.

In order to recognize the magnitude of the Medicaid problem one must first look at spending within the program. During the past ten years, Medicaid spending has skyrocketed by more than $1 billion; a 45-percent increase. Medicaid today consumes 21-percent of all general fund dollars and 32-percent of all spending in Maine. This new proposal moves Maine toward a more affordable Medicaid program moving the State closer to the national average and is consistent with what other states provide.

“We must prioritize the services we provide to preserve funding for Maine’s most needy and bring Medicaid back to its original purpose as a quality safety net for our most vulnerable,” says DHHS Commissioner Mayhew.

Maine’s Medicaid program is one of the most generous in the country. From June of 1998 to June of 2002, enrollment in Medicaid grew from 154,000 individuals to more than 200,000 individuals. Today, we have 361,000 Mainers using the program. As Medicaid has expanded spending have significantly risen; Maine’s per capita spending is nearly $1,900 per person while the national average is approximately $1,100 per person; and total state and federal spending on Medicaid has increased by over $1 billion in 10 years.

Additionally, paying for the program has become increasingly difficult due to federal cuts. In fiscal year 2012, federal Medicaid reimbursement to Maine has been reduced by more than $210 million. During the last 3 years, the money used to fill in the gaping budget hole was from one-time federal stimulus funds. This gimmick allowed the Department to sustain its expenditures, and make it appear the budget was balanced. The Governor and Commissioner Mary Mayhew stand firm that the State can no longer use gimmicks to balance Maine’s budget.

Commissioner Mayhew concludes, “Difficult decisions must be made in order to make the necessary and permanent structural changes to this program. It is a monumental task that can only be accomplished with an acceptance of the current economic climate and a willingness to prioritize services. Now is the time to set partisanship aside and work together toward a sensible solution for all Mainers.”