CONTRIBUTORS

LePage’s Medicaid average assumptions are wrong

Posted Jan. 06, 2012, at 3:53 p.m.

Gov. Paul LePage’s approach to MaineCare funding is incorrect. It follows that his solution is incorrect. He looks at average state spending in the U.S. on Medicaid and which programs are provided. He believes that Maine should not do more than the average state. This approach may be appropriate if we are establishing pollution control standards, or determining the level of a sales or income tax. In those areas, Maine does not need to lead the nation. Being near the national average is acceptable.

But this approach does not work when we budget for unique and essential services. Medicaid budgets are a perfect example.

To begin with, Maine’s population is the oldest in the nation — not merely aging, certainly not average age, but the oldest in the nation. Older people are generally poorer, less well — they have greater health care and life support needs that must be met.

And, we are also a relatively poor state (Maine ranks 35th in per capita income). This too adds to Medicaid spending needs — poor families, poor health. And finally, between our elderly and our poor, disability levels are higher in Maine than they are in the average state.

The governor would have us ignore these realities. He would have us spend no more than states with average age populations — states with average poverty and disability levels. But our Medicaid problems are greater than those in the average state. Unless we are prepared to ignore the real needs of thousands of Maine people, it follows that Maine’s Medicaid budget cannot be measured by what is being done in the average state. It must be measured by our circumstances, our unique needs.

In shaping his Medicaid budget, the governor raises the bogeyman of welfare fraud; he asserts that vast numbers of people travel to Maine to benefit from our Medicaid programs. But no evidence supports the latter assertion, and though some welfare fraud exists, the data indicates that it accounts for only a small part of Maine’s Medicaid budget. It does not justify the cuts being proposed.

The governor’s approach to Medicaid budgeting also fails to acknowledge that we get extraordinary value for every Maine tax dollar spent. Though federal matching commitments vary for different Medicaid programs, on average, Maine receives $1.70 in federal funds for every Maine tax dollar committed to Medicaid. Put another way, Maine taxpayers put up only 37 cents of every Medicaid dollar spent — the feds put up the remaining 63 cents.

In short, we cannot be guided by averages, by what other states are doing in fashioning their Medicaid budgets — these states are not standing in our shoes. Our Medicaid budget must reflect the fact that we have more elderly, more poor, more disabled individuals than almost any other state. The federal government will help, but we must also help ourselves.

Of course, we must cut fraud and waste where we find it, but the draconian cuts the governor proposes — $220 million over the next two years, 65,000 people cut immediately from MaineCare rolls — is unfair, economically unsound (it foregoes millions of federal dollars that Maine people are entitled to) and unnecessary. Notwithstanding the governor’s reluctance to examine them, there are alternative funding sources available.

For example, Medicaid’s budgetary needs could be met by postponing for a period of time recently enacted tax cuts (which disproportionately benefit the wealthy); reducing or eliminating tax expenditures that primarily benefit large and wealthy corporations (TIF and BETR outlays); raising meal and accommodation taxes to the national average (this merely asks summer visitors to pay a fair share of costs they give rise to); and narrowing sales tax exemptions and/or allowing the tax to reach a wider range of services (Maine’s present sales tax base is one of the narrowest in the nation).

Also, at the very least, Medicaid funding needs could be met by spreading the cost over the entire state budget (this would reduce the budget of all agencies only slightly).

The governor’s approach demeans us as a people. Those being served are not strangers. They are our elderly, our poor, our disabled, our parents, brothers, sisters, children and neighbors. They need and deserve a more reasonable, a more humane, approach than the governor is advocating.

Orlando E. Delogu is emeritus professor of law at the University of Maine School of Law.

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