AG defends lawsuit to get LePage’s Medicaid cuts approved

AUGUSTA, Maine — Attorney General William Schneider said Friday he was doing his job to uphold Maine law — not trying to cut residents’ health care services — when he filed a lawsuit in August to force the federal government to more quickly rule on and approve Maine’s request to make about $20 million in cuts to its Medicaid program.

Schneider laid out his legal argument for filing the suit before the Legislature’s Appropriations Committee. Democrats on the panel pressed him to explain why he proceeded with the case when it was apparently against federal law to scale back existing Medicaid services.

“Through this whole process, we’ve made a very, very strong substantive argument that the maintenance of effort program as it applies to Maine is unconstitutional,” Schneider told Appropriations Committee members. “Nobody has countered the argument.”

Schneider appeared before the legislative committee more than a month after a federal court threw out a lawsuit from Gov. Paul LePage’s administration that sought to force federal health officials to expedite approval of Maine’s request to make about $20 million in Medicaid cuts.

The LePage administration had been counting on the cuts — approved as part of two supplemental budget packages over the past year — to balance the state budget. The cuts were to take effect Oct. 1, but federal officials are allowed 90 days under the law to rule on whether Maine’s cuts are legal. That 90-day window ends Nov. 1 because the LePage administration submitted its request to amend its Medicaid state plan on Aug. 1 and the federal First Circuit Court of Appeals in Boston didn’t force the federal government to act sooner.

It has been uncertain from the start whether many of the cuts are legal under the Obama administration’s Affordable Care Act, which largely prohibits states from cutting existing Medicaid services in advance of a 2014 Medicaid expansion. The section of the law prohibiting those cuts is called the “maintenance of effort” provision.

The state cuts would affect coverage for 36,000 low-income people, eliminating coverage for 19- and 20-year-olds, tightening income eligibility requirements for low-income parents and scaling back Medicaid access for elderly residents who also qualify for Medicare benefits.

Schneider told Appropriations Committee members that the U.S. Supreme Court’s ruling on the Affordable Care Act in June makes those cuts legal. While the Supreme Court largely upheld the health care reform law, the court ruled it unconstitutional for the federal government to withhold funds for existing Medicaid services as a way to enforce the Medicaid expansion.

“The NFIB case gave us a solid legal foundation to pursue a plan amendment with the secretary [of Health and Human Services],” Schneider said, referring to the formal name of the Supreme Court case, the National Federation of Independent Business v. Sebelius.

U.S. Health and Human Services Secretary Kathleen Sebelius has said the Supreme Court ruling doesn’t affect the health care law’s maintenance of effort provision. But Schneider said Friday that Maine voluntarily expanded Medicaid coverage in 2008, and that the federal government stopped funding its share of that expanded coverage in 2011.

“We were in a position of Maine having gotten a bait and switch,” he said. “We were enticed into that by the additional federal reimbursement and we were locked into it by the Affordable Care Act with no ability to end our participation when the federal reimbursement stopped.”

Schneider also has said that the health care law’s maintenance of effort provision is “part and parcel of the Medicaid expansion that was struck down.”

“Why are you working so hard, why are you going to court, why are you spending taxpayers’ dollars to take health care away from the elderly and people with disabilities?” asked Rep. Peggy Rotundo of Lewiston.

“That’s not what we’re doing,” Schneider replied. “We’re doing all we can to implement the law. My responsibility is to uphold the law and give effect to the laws that are passed by the Legislature.”

If Maine is ultimately allowed to make the cuts, it could be some time before it happens, Schneider said. Federal officials are allowed 90 days to rule, but that timeline restarts anytime the federal government asks for more information from state officials.

“I would not be surprised if they asked us a question on the 90th day,” Schneider said.

That means “the likelihood that we’re going to have a $20 million hole in this budget is probably fairly high,” said Rep. Kenneth Fredette, R-Newport.