Medicaid Bombshell Rocks State House
Medicaid Bombshell Rocks State House
By Rep. Kathy Chase
On the night of March 10, I watched in the House Chamber as Governor John Baldacci delivered his State of the State address. The governor tried to sound an uplifting note, predicting a brighter future for Maine. He never uttered a word about a ticking time bomb in the MaineCare program, the state’s name for Medicaid.
Three days later, on Friday the 13th, the bomb went off. Baldacci administration officials told key legislative committees that MaineCare was running a $235 million deficit for fiscal 2009, which ends June 30.
The news sent shock waves through the State House. Legislators are already dealing with an $800 million shortfall in the upcoming 2010-2011 budget. A giant leak in MaineCare posed a huge problem. And that wasn’t all. The Department of Health and Human Services (DHHS) forecasts more MaineCare overruns for the next two years, to the tune of $90 million in 2010 and $65 million in 2011. These are simply guesses, of course. If Maine’s economy continues to deteriorate, the real numbers could be even worse.
Once the dust settled on March 13, the inevitable questions began to surface. What did the governor know and when did he know it? If the problem had been building for months, why were legislators not told in late January, when we passed a supplemental budget that cut spending by $140 million? Did the governor and his minions conceal the bad news until after his State of the State address?
In the immediate aftermath of the bombshell, administration staffers scrambled to downplay the damage. What’s the big deal, they seemed to say – it will all be covered with stimulus cash. They also intimated that DHHS had hinted for weeks that MaineCare usage was on the rise. But certainly no Republicans on the budget-writing Appropriations Committee had gotten the word that MaineCare had spun completely out of hand; nor had Republican leaders in the House and Senate.
State Senator Kevin Raye, leader of the Senate Republicans, was incredulous. “It’s doubtful the administration became aware of a $235 million hole only in the last few hours,” he said that night. Rep. Josh Tardy, leader of the House Republicans, was equally skeptical. “It’s hard to believe the administration did not know we were $235 million out of balance,” he noted, “with just three months to go in the fiscal year.”
Republican Senator Richard Rosen, a thoughtful member of the Appropriations Committee, said he expected a MaineCare shortfall in the $10 million range, because demand for the service rises in a sinking economy. But nobody was remotely expecting $235 million.
If the Baldacci administration deliberately misled Republican legislators, it is no small thing. The watchword around the State House this session is transparency. Everything is supposed to be out in the open – the good and the bad – so we can work together to solve the budget crisis. Judging by the reaction of legislators on my side of the aisle, any sense of trust has been badly damaged.
The task now is getting control of MaineCare before it wrecks the state’s finances. It’s true that the stimulus windfall will pay for this mess. Maine will take $65 million in stimulus money and use that to leverage a federal match of $170 million. Stimulus money also will help cover shortfalls in the next two years. But the stimulus bonanza ends in 2011, and the problem of an extremely costly MaineCare system will remain.
MaineCare is an entitlement program, funded with a combination of state and federal money. It provides free medical and dental care to low-income residents. Approximately 270,000 Maine citizens are enrolled in the program, making MaineCare the second largest Medicaid program in the country as a percentage of population. It also is very lenient. Those on MaineCare can make much more money than people in other states and still qualify for full benefits.
None of this comes cheap. MaineCare runs on an annual budget of about $2.4 billion. It absorbs 20 percent of the state budget, costing Maine taxpayers more than $1.2 billion every budget cycle.
The most stunning fact is that MaineCare recipients, on average, rack up more than $8,800 in medical charges every year. That’s 90 percent above the national average for Medicaid spending. We cover virtually everything, even rides to a doctor’s office. We hear anecdotally of recipients who see doctors 100 times a year or more, and of people moving to Maine temporarily for costly medical procedures not covered by Medicaid in their home states.
If MaineCare operated at the national average in cost per recipient, we could retain all 270,000 people and still save about $1 billion a year. With the state-federal formula, Maine taxpayers would save some $340 million. That would provide a stimulus program that really could work.
We cannot afford a “Cadillac” Medicaid system any longer. It is squeezing out many other critical state needs, including road maintenance and higher education.
The huge MaineCare cost overrun was a wake-up call. In the interest of fiscal sanity, the Baldacci administration needs to work with legislators to curb this runaway program. Only by reforming MaineCare can we assure services for those most in need, at a cost Maine taxpayers can afford.
Rep. Kathy Chase (R-Wells) is the ranking Republican on the Taxation Committee
By Rep. Kathy Chase
On the night of March 10, I watched in the House Chamber as Governor John Baldacci delivered his State of the State address. The governor tried to sound an uplifting note, predicting a brighter future for Maine. He never uttered a word about a ticking time bomb in the MaineCare program, the state’s name for Medicaid.
Three days later, on Friday the 13th, the bomb went off. Baldacci administration officials told key legislative committees that MaineCare was running a $235 million deficit for fiscal 2009, which ends June 30.
The news sent shock waves through the State House. Legislators are already dealing with an $800 million shortfall in the upcoming 2010-2011 budget. A giant leak in MaineCare posed a huge problem. And that wasn’t all. The Department of Health and Human Services (DHHS) forecasts more MaineCare overruns for the next two years, to the tune of $90 million in 2010 and $65 million in 2011. These are simply guesses, of course. If Maine’s economy continues to deteriorate, the real numbers could be even worse.
Once the dust settled on March 13, the inevitable questions began to surface. What did the governor know and when did he know it? If the problem had been building for months, why were legislators not told in late January, when we passed a supplemental budget that cut spending by $140 million? Did the governor and his minions conceal the bad news until after his State of the State address?
In the immediate aftermath of the bombshell, administration staffers scrambled to downplay the damage. What’s the big deal, they seemed to say – it will all be covered with stimulus cash. They also intimated that DHHS had hinted for weeks that MaineCare usage was on the rise. But certainly no Republicans on the budget-writing Appropriations Committee had gotten the word that MaineCare had spun completely out of hand; nor had Republican leaders in the House and Senate.
State Senator Kevin Raye, leader of the Senate Republicans, was incredulous. “It’s doubtful the administration became aware of a $235 million hole only in the last few hours,” he said that night. Rep. Josh Tardy, leader of the House Republicans, was equally skeptical. “It’s hard to believe the administration did not know we were $235 million out of balance,” he noted, “with just three months to go in the fiscal year.”
Republican Senator Richard Rosen, a thoughtful member of the Appropriations Committee, said he expected a MaineCare shortfall in the $10 million range, because demand for the service rises in a sinking economy. But nobody was remotely expecting $235 million.
If the Baldacci administration deliberately misled Republican legislators, it is no small thing. The watchword around the State House this session is transparency. Everything is supposed to be out in the open – the good and the bad – so we can work together to solve the budget crisis. Judging by the reaction of legislators on my side of the aisle, any sense of trust has been badly damaged.
The task now is getting control of MaineCare before it wrecks the state’s finances. It’s true that the stimulus windfall will pay for this mess. Maine will take $65 million in stimulus money and use that to leverage a federal match of $170 million. Stimulus money also will help cover shortfalls in the next two years. But the stimulus bonanza ends in 2011, and the problem of an extremely costly MaineCare system will remain.
MaineCare is an entitlement program, funded with a combination of state and federal money. It provides free medical and dental care to low-income residents. Approximately 270,000 Maine citizens are enrolled in the program, making MaineCare the second largest Medicaid program in the country as a percentage of population. It also is very lenient. Those on MaineCare can make much more money than people in other states and still qualify for full benefits.
None of this comes cheap. MaineCare runs on an annual budget of about $2.4 billion. It absorbs 20 percent of the state budget, costing Maine taxpayers more than $1.2 billion every budget cycle.
The most stunning fact is that MaineCare recipients, on average, rack up more than $8,800 in medical charges every year. That’s 90 percent above the national average for Medicaid spending. We cover virtually everything, even rides to a doctor’s office. We hear anecdotally of recipients who see doctors 100 times a year or more, and of people moving to Maine temporarily for costly medical procedures not covered by Medicaid in their home states.
If MaineCare operated at the national average in cost per recipient, we could retain all 270,000 people and still save about $1 billion a year. With the state-federal formula, Maine taxpayers would save some $340 million. That would provide a stimulus program that really could work.
We cannot afford a “Cadillac” Medicaid system any longer. It is squeezing out many other critical state needs, including road maintenance and higher education.
The huge MaineCare cost overrun was a wake-up call. In the interest of fiscal sanity, the Baldacci administration needs to work with legislators to curb this runaway program. Only by reforming MaineCare can we assure services for those most in need, at a cost Maine taxpayers can afford.
Rep. Kathy Chase (R-Wells) is the ranking Republican on the Taxation Committee
posted by Kathleen Chase at
8:24 PM
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