By Harris Meyer | March 30, 2018
Like other state Republican officials across the country, Maine
Gov. Paul LePage has argued his state can't afford to expand coverage to
low-income adults even though the federal government would pick up the bulk of
the cost.
But a new national report from the Brookings Institution shows 31 expansion states have incurred negligible costs so far, at least partly because federal expansion dollars cover costs the states were bearing prior to expansion. That finding runs counter to conservative claims that Medicaid expansion spending is an "out-of-control wildfire" for states.
Another new report, from Manatt Health, found that the net cost of Maine's expansion would be half of what LePage claims.
Maine voters overwhelmingly passed a binding ballot initiative in November mandating Medicaid expansion under the Affordable Care Act by July 2018. It was strongly backed by the Maine Hospital Association and the Maine Medical Association.
LePage, who previously vetoed five expansion bills, is balking at sending the CMS a plan to implement the voter-passed expansion by the April 3 deadline set in the initiative. He is demanding that the Legislature first come up with $60 million in budget savings to fund the expansion's first year. Expansion supporters are reluctantly preparing to file a lawsuit to require implementation of the ballot initiative.
"Show me the money," LePage told lawmakers in his State of the State speech last month. "It would be fiscally irresponsible for the Legislature to demand we implement Medicaid expansion without adequate funding."
Manatt Health found, however, that Maine would only need $30.5 million, not $60 million, in additional net funding to cover an estimated 50,000 people who would enroll in the first year. That would rise to $48.5 million to cover 68,000 people in 2020, and $61.9 million to cover 71,000 people in 2021.
The federal government would contribute $316.6 million in the first year, $445.3 million in the second year, and $489.5 million in the third year. The federal share of total expansion costs would be 94% in the first year, dropping to 90% in 2020 and thereafter.
Julie Rabinowitz, LePage's press secretary, rejected Manatt's state cost estimate, which is similar to the estimate issued last year by the state Office of Fiscal Policy and Review. She said the assumption that expansion would save the state money is "reckless," given what she described as other states' "spending overruns" on Medicaid expansion and their underestimates of enrollment.
She also cited Maine's bad experience with its previous Medicaid expansion, which was enacted prior to LePage's tenure and before the federal government began paying for expansion under the ACA.
Expansion supporters say Maine could cover the first-year expansion cost without additional budget appropriations at least through May 2019 by tapping remaining budgeted dollars in its Medicaid account. In addition, the state's recent revenue forecast projected a budget surplus of $128 million, which also could be applied to the expansion cost.
"They should set aside some of that surplus for Medicaid expansion costs," said Jeffrey Austin, the Maine Hospital Association's vice president for governmental affairs. "It's the law and they know it's going to cost money."
But LePage has proposed to use those surplus funds to bring the state income tax system into conformity with the tax cut law passed by Congress in December by cushioning higher-income people from the law's rollback of deductions for local and state taxes.
"He sweeps most of that money into additional tax breaks to corporations and wealthy people, then he turns around and says we don't have money for Medicaid expansion," said Robyn Merrill, executive director of Maine Equal Justice Partners and a leader of the campaign to expand Medicaid. "That's really disingenuous."
LePage and GOP leaders in the other 17 states that haven't expanded Medicaid base much of their opposition to expansion on its affordability, arguing that it's been a fiscal disaster in expansion states.
Opponents, such as the conservative Foundation for Government Accountability, say states have enrolled far more people than expected, with much higher costs than originally projected. They also contend states can't count on the federal government to continue picking up 90% of the cost, as required by the ACA.
But Brookings' report found that expansion enrollment has either fallen short of or not substantially exceeded expectations, and that there were no significant increases in state spending as a result of expansion.
The report noted that various categories of previously covered Medicaid beneficiaries can now enroll under the ACA expansion program, which sharply reduces the state's share of its Medicaid costs under the enhanced federal matching rate. In addition, expanded Medicaid pays for various costs the states previously were paying outside of Medicaid.
In Maine, the Manatt report projects the state will generate savings from the shift of various groups from the traditional state Medicaid program, called MaineCare, to expanded Medicaid. Those groups include pregnant women, breast and cervical cancer patients, disabled people, HIV patients, correctional inmates needing hospital care, and people needing mental health and substance abuse services.
But LePage has refused to consider any of those offsetting savings. "Those programs aren't necessarily winding down at the same time," Rabinowitz said.
Expansion supporters hope the Democratic-controlled state house and the Republican-controlled state senate will reach a budget deal in April that includes Medicaid expansion funding in exchange for tax cuts that offset tax increases in the new federal tax law. As part of the deal, Republicans might agree to override LePage's likely veto of expansion funding.
"We'd rather work this out rather than fight it out in court," Merrill said. "Our focus is getting healthcare to people as soon as possible. They've been waiting too long as it is."
Meanwhile, LePage is awaiting the CMS' response to his Medicaid waiver requestto establish work requirements, premiums, a $5,000 asset test, and an end to retroactive eligibility for Maine's 267,000 current beneficiaries. His administration projects the waiver would lead to several thousand fewer people on Medicaid.
Merrill said her group would file a lawsuit challenging the work requirement if it's approved by the CMS. The hospital association opposes the end to retroactive coverage for people who receive healthcare services and are found to be Medicaid-eligible, which would increase uncompensated care for providers.
There is also concern about Maine's proposed $5,000 asset test to determine Medicaid eligibility for people applying based on low income. The CMS previously has not approved any state waivers for asset tests, said MaryBeth Musumeci, a Medicaid policy analyst at the Kaiser Family Foundation.
Depending on the details, an asset test could potentially disqualify many people if they own a home or vehicle or have savings. The ACA has no asset test for Medicaid expansion enrollees, which has made coverage more widely available to the working poor.
"That would be a first, and a reversal of a rule the ACA changed," Musumeci said.
But a new national report from the Brookings Institution shows 31 expansion states have incurred negligible costs so far, at least partly because federal expansion dollars cover costs the states were bearing prior to expansion. That finding runs counter to conservative claims that Medicaid expansion spending is an "out-of-control wildfire" for states.
Another new report, from Manatt Health, found that the net cost of Maine's expansion would be half of what LePage claims.
Maine voters overwhelmingly passed a binding ballot initiative in November mandating Medicaid expansion under the Affordable Care Act by July 2018. It was strongly backed by the Maine Hospital Association and the Maine Medical Association.
LePage, who previously vetoed five expansion bills, is balking at sending the CMS a plan to implement the voter-passed expansion by the April 3 deadline set in the initiative. He is demanding that the Legislature first come up with $60 million in budget savings to fund the expansion's first year. Expansion supporters are reluctantly preparing to file a lawsuit to require implementation of the ballot initiative.
"Show me the money," LePage told lawmakers in his State of the State speech last month. "It would be fiscally irresponsible for the Legislature to demand we implement Medicaid expansion without adequate funding."
Manatt Health found, however, that Maine would only need $30.5 million, not $60 million, in additional net funding to cover an estimated 50,000 people who would enroll in the first year. That would rise to $48.5 million to cover 68,000 people in 2020, and $61.9 million to cover 71,000 people in 2021.
The federal government would contribute $316.6 million in the first year, $445.3 million in the second year, and $489.5 million in the third year. The federal share of total expansion costs would be 94% in the first year, dropping to 90% in 2020 and thereafter.
Julie Rabinowitz, LePage's press secretary, rejected Manatt's state cost estimate, which is similar to the estimate issued last year by the state Office of Fiscal Policy and Review. She said the assumption that expansion would save the state money is "reckless," given what she described as other states' "spending overruns" on Medicaid expansion and their underestimates of enrollment.
She also cited Maine's bad experience with its previous Medicaid expansion, which was enacted prior to LePage's tenure and before the federal government began paying for expansion under the ACA.
Expansion supporters say Maine could cover the first-year expansion cost without additional budget appropriations at least through May 2019 by tapping remaining budgeted dollars in its Medicaid account. In addition, the state's recent revenue forecast projected a budget surplus of $128 million, which also could be applied to the expansion cost.
"They should set aside some of that surplus for Medicaid expansion costs," said Jeffrey Austin, the Maine Hospital Association's vice president for governmental affairs. "It's the law and they know it's going to cost money."
But LePage has proposed to use those surplus funds to bring the state income tax system into conformity with the tax cut law passed by Congress in December by cushioning higher-income people from the law's rollback of deductions for local and state taxes.
"He sweeps most of that money into additional tax breaks to corporations and wealthy people, then he turns around and says we don't have money for Medicaid expansion," said Robyn Merrill, executive director of Maine Equal Justice Partners and a leader of the campaign to expand Medicaid. "That's really disingenuous."
LePage and GOP leaders in the other 17 states that haven't expanded Medicaid base much of their opposition to expansion on its affordability, arguing that it's been a fiscal disaster in expansion states.
Opponents, such as the conservative Foundation for Government Accountability, say states have enrolled far more people than expected, with much higher costs than originally projected. They also contend states can't count on the federal government to continue picking up 90% of the cost, as required by the ACA.
But Brookings' report found that expansion enrollment has either fallen short of or not substantially exceeded expectations, and that there were no significant increases in state spending as a result of expansion.
The report noted that various categories of previously covered Medicaid beneficiaries can now enroll under the ACA expansion program, which sharply reduces the state's share of its Medicaid costs under the enhanced federal matching rate. In addition, expanded Medicaid pays for various costs the states previously were paying outside of Medicaid.
In Maine, the Manatt report projects the state will generate savings from the shift of various groups from the traditional state Medicaid program, called MaineCare, to expanded Medicaid. Those groups include pregnant women, breast and cervical cancer patients, disabled people, HIV patients, correctional inmates needing hospital care, and people needing mental health and substance abuse services.
But LePage has refused to consider any of those offsetting savings. "Those programs aren't necessarily winding down at the same time," Rabinowitz said.
Expansion supporters hope the Democratic-controlled state house and the Republican-controlled state senate will reach a budget deal in April that includes Medicaid expansion funding in exchange for tax cuts that offset tax increases in the new federal tax law. As part of the deal, Republicans might agree to override LePage's likely veto of expansion funding.
"We'd rather work this out rather than fight it out in court," Merrill said. "Our focus is getting healthcare to people as soon as possible. They've been waiting too long as it is."
Meanwhile, LePage is awaiting the CMS' response to his Medicaid waiver requestto establish work requirements, premiums, a $5,000 asset test, and an end to retroactive eligibility for Maine's 267,000 current beneficiaries. His administration projects the waiver would lead to several thousand fewer people on Medicaid.
Merrill said her group would file a lawsuit challenging the work requirement if it's approved by the CMS. The hospital association opposes the end to retroactive coverage for people who receive healthcare services and are found to be Medicaid-eligible, which would increase uncompensated care for providers.
There is also concern about Maine's proposed $5,000 asset test to determine Medicaid eligibility for people applying based on low income. The CMS previously has not approved any state waivers for asset tests, said MaryBeth Musumeci, a Medicaid policy analyst at the Kaiser Family Foundation.
Depending on the details, an asset test could potentially disqualify many people if they own a home or vehicle or have savings. The ACA has no asset test for Medicaid expansion enrollees, which has made coverage more widely available to the working poor.
"That would be a first, and a reversal of a rule the ACA changed," Musumeci said.
Harris Meyer is a senior
reporter providing news and analysis on a broad range of healthcare topics. He
served as managing editor of Modern Healthcare from 2013 to 2015. His more than
three decades of journalism experience includes freelance reporting for Health
Affairs, Kaiser Health News and other publications; law editor at the Daily
Business Review in Miami; staff writer at the New Times alternative weekly in
Fort Lauderdale, Fla.; senior writer at Hospitals & Health Networks;
national correspondent at American Medical News; and health unit researcher at
WMAQ-TV News in Chicago. A graduate of Northwestern University, Meyer won the
2000 Gerald Loeb Award for Distinguished Business and Financial Journalism.
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