As freshman legislators, we’re beginning to remember fondly when we thought a million dollars was real money. The massive state budget lumbering through the Legislature will end up at around $6.1 billion. These numbers boggle one’s mind; but let’s try to put them in perspective — 1 billion seconds ago it was 1978. Jimmy Carter was president.
Twenty percent of Maine’s annual budget goes for MaineCare, as the state calls its Medicaid program. In the current budget for fiscal year 2009, state taxpayers are supplying more than $600 million for MaineCare, which provides free medical and dental care for low-income residents, the disabled and people on SSI. The federal government provides a generous match, making for a grand total of $2.4 billion this year.
In this tough financial climate, legislative committees all over the State House are sweating to find a few thousand dollars to keep vital programs alive by inching up fees and eliminating positions as they work on the 2010-11 biennial budget.
Considering the emphasis on fiscal belt-tightening, the MaineCare bombshell that detonated on March 13 was extremely ill-timed. That was the day the Department of Health and Human Services revealed that MaineCare would overrun its budget by $235 million in fiscal year 2009. Under the stimulus-enhanced federal match-ing formula for Medicaid, Maine’s share of this new budget deficit is $65 million.
Obviously, $65 million is serious money, especially compared to the rest of the budget. That’s more than it takes to run the entire Department of Environmental Protection for a year. It’s almost as much as the budget for the state’s judicial branch. It is larger than the annual budgets for the Department of Marine Resources and the Department of Inland Fisheries and Wildlife combined.
Hearing about the shortfall a few days after the governor’s State of the State address left the entire Republican caucus wondering why this radical change in our state’s fiscal health was not revealed sooner. The governor never even mentioned it in his speech.
Based on the professed desire for transparency, legislators should have been notified when the MaineCare budget first started to get out of hand. Yet the concerns go much deeper than a lack of disclosure. First, what is the cause of the shortfall; and second, what is the real problem?
The sharp increase in MaineCare obligations has been attributed to increased use — more people are in need and eligible for MaineCare services, because of the sinking economy. While this is partly true, it also has been reported that $15 million was the result of accounting errors.
To get to the root of the MaineCare problem, however, one needs to examine its overall approach. Maine’s eligibility requirements for this program, undoubtedly enhanced during better economic times, are far more liberal than the national average. Maine has 19 percent more residents on Medicaid than the U.S. average.
In other words, those on MaineCare can earn much more than the U.S. average Medicaid qualifying income rate. We could fix that, theoretically, except the Obama stimulus freezes our eligibility guidelines to their 2008 level. So for now we’re stuck with an expensive program that covers more and more people.
Clearly, this recent development underscores the fact that Maine cannot sustain this bloated program as it stands. Going forward, we need to begin reining in MaineCare spending. Already, the astounding cost of the program is squeezing out other critical needs, from road maintenance to higher education. And while the stimulus has come to the rescue for this short-term repair, those one-time funds will end in 2011.
We can begin by examining MaineCare’s extensive menu of benefits. Maine has the second most expensive Medicaid program in the nation, costing us some $8,800 per recipient per year, partly because MaineCare covers virtually everything, even transportation to a doctor’s office. In fact, it is 90 percent more costly per person than the U.S. average.
If Maine had average Medicaid spending and kept everyone now on MaineCare covered, the General Fund budget would drop by approximately $340 million per year, roughly 30 percent of the entire amount collected in the personal income tax. Imagine the permanent economic stimulus from a 30 percent income tax reduction.
Beyond the current problem, the word on every legislator’s lips, Republican and Democrat, should be “reform.” Only by reforming MaineCare can we sustain services for those who must be served, at a cost Maine taxpayers can afford.
Rep. Dianne Tilton, R-Harrington, serves on the Marine Resources Committee and the Joint Select Committee on Maine’s Energy Future. Rep. David Burns, R-Whiting, serves on the Criminal Justice and Public Safety Committee.