Governor LePage Responds to Democrats 11th Hour Proposal to Pay Maine’s Hospitals

March 11, 2013

For Immediate Release: Monday, Mar. 11
Contact: Adrienne Bennett, Press Secretary (207) 287-2531

AUGUSTA – Governor Paul R. LePage responded today to the Democrats’ 11th-hour proposal to tie $484 million in hospital debt to greatly expand Medicaid coverage and force health care facilities to change the way they do business.

After stalling for weeks, the Democrats finally revealed their “plan” to repay the hospitals this morning at 9:30 a.m., just 30 minutes before the Governor was scheduled to testify before the before the Joint Standing Committee on Veterans and Legal Affairs on his bill to pay the hospitals.

The Governor’s bill, LD 239 An Act to Improve the Return to the State on the Sale of Spirits and To Provide a Source of Payment for Maine’s Hospitals, lays out a detailed plan to repay the hospitals $484 million in debt owed to them since 2009 by restructuring the state’s liquor contract and recapturing millions of dollars that now flow to an out-of-state company. Under the Governor’s plan, the hospitals could be paid by June 1.

In addition, the Governor’s plan would advance $105 million in bonds, releasing funding for a variety of projects across Maine. His comprehensive plan would inject nearly $700 million into Maine’s economy, creating health care and construction jobs, investing millions to pay for clean water and transportation projects and setting aside money for the state’s depleted rainy day fund.

The Democrats plan would extend the state’s bad deal on the liquor contract, requiring a one-time upfront payment to pay off the hospitals and giving an out-of-state company millions in profits that should go to Maine.

“This is the same type of plan they used 10 years ago to fill a one-time budget hole,” the Governor said. “That fire sale of a deal allowed an out-of-state company to make millions, while Maine state government lost revenue, retailers lost sales to New Hampshire and our consumers lost the opportunity for more competitive prices.”

Requiring the upfront payment of $200 million inhibits competition by limiting bidders to those who can afford to finance such a large amount. Such a massive payment to the state would require financing from somewhere—probably a Wall Street firm.

Even worse, the higher interest payments and taxes for this kind of private-sector financing, which amounts to millions of dollars, would be borne by Maine’s taxpayers. The Governor’s plan would use a low-interest bond funded by proceeds from the liquor contract, which would provide a more lucrative return for Mainers.

The Governor’s plan is the result of more than three months of planning, research and detailed analysis.

“The Democrats’ plan consists of three talking points, and it promises more years of political rhetoric,” the Governor said. “Their plan is yet another tactic designed to distract attention from the real issue. Our hospitals need to be paid, and our state deserves to recapture millions of dollars from a better liquor contract. Anything else is just political posturing.”

The Governor said he is focused on paying the hospitals, not tying together unrelated issues.

“The Medicaid expansion is a totally separate issue,” he said. “We need to pay our past debts. The minute we pay the hospitals, we’ll talk about Medicaid expansion. But I won’t negotiate the details of Medicaid expansion in the press. How can we talk about expansion when we haven’t paid our bills yet? That’s how we racked up these unpaid Medicaid bills to hospitals in the first place.”