Medicaid use grows, threatening budget

Posted Sept. 14, 2011, at 5:40 p.m.
Last modified Sept. 14, 2011, at 6:45 p.m.
Mary Mayhew
Pat Wellenbach | AP
Mary Mayhew

AUGUSTA, Maine – The volume of claims under MaineCare, the Medicaid program, are above estimates so far this budget year, raising concerns the program will need more money than budgeted to get through the year.

“There is no doubt it is an alarming issue that warrants our full attention,” Mary Mayhew, commissioner of Health and Human Services, said in an interview. “We have put into place pretty close monitoring of our week-to-week experience with claims volume to get an explanation of what is happening, what is causing the increased volume.”

She said that based on the analysis so far, she cannot say with certainty that there is a pattern that would indicate the need to change projections, but acknowledged she is “leaning” toward that conclusion.

“We have not drilled down on the details of what is driving the increased volume,” she said. “We are working to have that ready when we go before the Appropriations Committee at the end of the month.”

Mayhew is concerned that the base projections of use of Medicaid she inherited from the Baldacci administration were too low. Adjustments in this two-year budget were to make up for loss of the enhanced matching rate under the federal Recovery Act, and did not change the growth projections for the program.

Mayhew said the latest census report on poverty could be a partial explanation of the increase in Medicaid use. About 161,000 Mainers lived in poverty in 2010, and that translates to a poverty rate of 12.5 percent, up from 11.4 percent in 2009.

“We absolutely know that the economic challenges that are plaguing the state continue to challenge us with continued demand for services,” she said.

Sen. Richard Rosen, R-Bucksport, co-chairman of the Appropriations Committee, agrees the increase in average claims of $1.65 million a week is a serious concern. He said if that continues, it will result in the need for significant budget changes to fund the program.

“They have already moved $12 million from the last two quarters of the year,” he said, “that is certainly a red flag to me that we will need a supplemental budget.”

Rosen said the committee had discussed the base assumptions of growth that were in the budget, with bipartisan concern that the slow economic recovery would lead to greater use of the Medicaid program and other income-based social service programs.

“The department has in fact acknowledged to the committee that they anticipate that this trend will continue,” he said. Rosen said that was in a memo to the Appropriations Committee in advance of the panel’s meeting this month.

“This shows why it is so important that we focus on creating more jobs in Maine,” said Rep. Peggy Rotundo, D-Lewiston, the lead Democrat on the panel. “We need to get our economy moving again to solve this and other problems we face.”

She said while the news that use of Medicaid is up is disappointing, it is not surprising.

The panel was worried during budget deliberations earlier this year that the economy was not growing as predicted. Sen. Dawn Hill, D-York, the only Democratic senator on the committee, agreed with Rotundo that the economy is the principal reason for increased demand.

“We can’t leave people out on the street, we can’t leave people without health care,” she said. “We need to come together as a state and deal with this.”

Rosen agreed that a major factor in the increased use of the Medicaid program is the continued increase in poverty in the state. He said for the last decade there has been a “very disturbing” trend in the increasing number of children in poverty.

“That started before the Great Recession, and it continues,” he said.

The Medicaid program is funded mostly by the federal government with the state paying about a third of the cost. As a result, the state is limited in what it can do to change the program.

Mayhew said her agency will seek to better manage MaineCare to try to control costs, but she said if there are more people seeking help because of the economy, there are limits to that strategy.

“We do have some of the other seed accounts in Medicaid that we know are overallocated,” she said, “so we hope we can reallocate resources.”

Mayhew said she hopes to have some answers for the Appropriations Committee when it meets Sept. 26.

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