Congressional Research Service says states can’t shrink Medicaid as LePage administration plans

Gov. Paul LePage speaks at the Maine Republican Convention at the Augusta Civic Center in Augusta in May 2012.
Robert F. Bukaty | AP
Gov. Paul LePage speaks at the Maine Republican Convention at the Augusta Civic Center in Augusta in May 2012.
Posted July 23, 2012, at 8:52 p.m.

AUGUSTA, Maine — States cannot scale back their existing Medicaid services, Congress’ nonpartisan research arm said last week in a report analyzing the Supreme Court’s ruling that largely upheld the Obama administration’s Affordable Care Act.

It’s the latest interpretation of last month’s court ruling that conflicts with the way Gov. Paul LePage’s administration, Maine Attorney General William Schneider and other Maine Republicans have read the Supreme Court decision on the health care law.

But it doesn’t change the administration’s plans to apply to the federal government to amend its Medicaid State Plan by cutting services to balance the state budget, said LePage spokeswoman Adrienne Bennett.

“There are varying interpretations of this,” Bennett said. “The Maine attorney general will be laying the grounds of our position within the amendment to the state Medicaid plan.”

The Congressional Research Service, a division of the Library of Congress that provides legal and policy analysis to members of Congress, published a report last week that concludes that the Supreme Court’s ruling has no effect on the health care law’s so-called “maintenance of effort” provision, which prohibits states from cutting existing Medicaid services before 2014.

While the report acknowledges the complexity of the Supreme Court ruling, its reading supports the view — held by Maine Democrats — that the state is prohibited from making $10 million in Medicaid cuts that Republican lawmakers approved in May as part of a supplemental budget and that LePage signed into law.

“There are interpretations emerging that show that we’re right,” said Rep. Peggy Rotundo of Lewiston, the ranking Democrat on the Legislature’s budget-writing Appropriations Committee. “We are reaching out for guidance, but it certainly appears that waivers would be needed to go forward. If that’s the case, and they don’t get those waivers, then their actions are illegal, and it does leave a big hole in the budget for January.”

“The CRS memo reinforces what we’ve believed to be the case,” U.S. Rep. Chellie Pingree, a Democrat, said in a statement released by her office.

Earlier this month, Pingree wrote to U.S. Health and Human Services Secretary Kathleen Sebelius, asking her to block Maine’s planned Medicaid cuts and saying that the Supreme Court decision didn’t affect the “maintenance of effort” provision. In a letter to governors that same week, Sebelius expressed the same reading of the court ruling.

The Medicaid cuts at issue tighten income eligibility requirements for low-income parents — by lowering the qualifying income to 100 percent of the poverty level from 133 percent — and eliminate Medicaid coverage for 19- and 20-year-olds. The reductions would affect 21,000 people starting Oct. 1, according to the state Department of Health and Human Services.

Whether the cuts are permissible was thrown into question by the Supreme Court ruling, which determined it was unconstitutionally coercive for the federal government to withhold all Medicaid funds from a state that doesn’t participate in the expansion of Medicaid that is part of the Affordable Care Act.

The LePage administration sees that portion of the ruling as a sign it is legal to go ahead with cuts to existing Medicaid services simply by applying to the federal government for a routine amendment to Maine’s Medicaid State Plan. Before the court ruling, the administration acknowledged it would have needed a full-fledged waiver from the law to proceed with the planned Medicaid cuts.

Wisconsin’s health services secretary, Dennis Smith, recently told the New York Times that he shared the LePage administration’s view. Smith is a former federal Medicaid director who served during the George W. Bush administration.

The Congressional Research Service reports are meant to provide expert guidance to members of Congress who request it. While they’re not legally binding, the reports are generally prepared by leading scholars, said Calvin Mackenzie, an American government professor at Colby College in Waterville.

“[T]hey come close to the gold standard,” Mackenzie wrote in an email. “If CRS comes to a conclusion different from one offered by a politician, it would be reasonable to suspect that CRS followed the facts while the politician followed an ideology or political preference.”

Joseph Reisert, who teaches American constitutional law at Colby, said the report’s conclusion on the health care law’s maintenance of effort requirement offers “ammunition to the side that says the state should carry through with the maintenance of effort.”

It’s conceivable that the report could be used in a court case over the maintenance of effort provision, Reisert said.

“If it goes to court, the secretary of Health and Human Services’ side in the lawsuit is certainly going to make reference to this,” he said.

A court resolution to the maintenance of effort dispute is a distinct possibility. Schneider, Maine’s attorney general, said recently that the state could “seek further redress in the courts” if the federal government doesn’t allow the state to make its planned Medicaid cuts.

A spokeswoman for Schneider declined on Monday to offer details on the legal case Maine will make to allow it to scale back Medicaid services, but said those details will be forthcoming in the state’s application for an amendment to its state Medicaid plan.

Asked for her reaction to the Congressional Research Service report, Sen. Olympia Snowe, a Republican, said Maine’s generous standards for Medicaid eligibility put the state in a difficult position.

“Indeed, states with low eligibility wouldn’t be forced to make the same difficult budget decisions as states like Maine which are required to maintain their current, higher eligibility standards,” Snowe said in a statement released by her office. “Furthermore, over the long term, the low-eligibility states will receive a higher level of federal support than Maine for covering the exact same populations.”

Second District Rep. Mike Michaud, a Democrat, and Sen. Susan Collins, a Republican, said they wanted to see the Obama administration collaborate with states to address the impact of the Supreme Court decision.

“Senator Collins has said that she is hopeful the federal Department of Health and Human Services will work closely with states to maintain the safety net that protects our most vulnerable citizens, while also helping financially strapped states avoid draconian cuts to other critically important areas,” Collins spokesman Kevin Kelley said in an email.

“At the end of the day, we must all work together to ensure that all Americans receive access to affordable, quality health care,” Michaud said in a statement released by his office. “Regardless of one’s political stripes, I think this is a goal everyone can agree on.”

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