The political winds shifted on Monday in surprising and encouraging fashion. Gov. Paul LePage’s office said it has started talking with the Obama administration about potentially expanding Maine’s Medicaid program under the federal Affordable Care Act. And Democratic legislative leaders unveiled their plan to pay the debt the state owes its hospitals.
Both announcements represent positive steps and possibly a way for political opposites to meet in the middle. Lawmakers would be wise, as they dig into the details and debate both Medicaid reform and paying the debt to hospitals incurred for their Medicaid services, to keep the wider health care picture in mind. The two topics — Medicaid expansion and a debt repayment plan for the hospitals — are part of the same larger issue concerning how to provide good care for all while reducing costs over time.
Debt owed to hospitals — for their services provided under the state’s Medicaid program — ballooned during the last decade, after Maine expanded Medicaid eligibility, health care costs increased, and the state had to pay a legal settlement to 21 hospitals. Medicaid expenses are a major cost driver for the Department of Health and Human Services and have caused many of the state’s unfortunate supplemental budgets. A new approach was needed long ago.
There may be relief if the state expands Medicaid under Obamacare. Until Monday, Maine was among the minority of states that had rejected or leaned toward rejecting the expansion, which would extend Medicaid coverage to those not traditionally covered under the public health insurance program. LePage had argued that expanding Medicaid would not be affordable, but financial analyses from the Kaiser Family Foundation and the conservative Heritage Foundation have showed that Maine would be one of 10 states to see the amount of money it spends on Medicaid decrease during the next decade, while the federal share would increase.
In choosing to expand Medicaid, the state would be committing to improving public health and reducing health differences linked to economic disadvantages. Democratic legislative leaders articulated that fact on Monday when they unveiled their plan to repay the hospitals. They called for more transparency in medical billing, a shift toward a system of care in which doctors are paid for improving health, and a willingness to accept federal dollars to expand Medicaid.
Of course, the past must be dealt with, too. How can the state pay $484 million in hospital debt while retaining the greatest possible value from a renegotiated liquor contract? Answering that question will require Maine lawmakers to analyze the financial projections of two competing proposals, from LePage and Sen. Seth Goodall, D-Richmond.
Democrats, who revealed their repayment plan a couple of months after LePage announced his, said they want to use an upfront payment from a renegotiated wholesale liquor contract to pay the state’s share of the debt. A $186 million payment to the hospitals would trigger $298 million in matching funds from the federal government. LePage, though, would rather issue a revenue bond to pay the debt and use future liquor revenue to pay off the bond.
As lawmakers examine both plans, it would be helpful to have answers to the following: If the state uses liquor revenue to pay off a bond, per the governor’s plan, will the interest and associated costs with the bond be more than the costs associated with the Democrats’ plan, which might force the company in charge of the state’s wholesale liquor business to take out a large loan to make the required upfront payment and pass on the interest costs to the state?
Is it feasible for the state to negotiate a new contract, get an upfront payment from the successful bidder and pay off the hospitals, all by Oct. 1, as Democrats propose? In requiring a significant upfront payment, are Democrats limiting the number of worthy entities that will bid?
If Democrats are open to dedicating funds from the liquor contract to pay hospital debt, and the governor is possibly interested in expanding Medicaid, there should be a way for them to reach common ground. If the larger ideas can converge, the details can, too.