June 18, 2018
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Is Medicaid expansion a win for Maine? Don’t be fooled

By Joel Allumbaugh, Special to the BDN

I recently spent a week out of the country and returned to find a peppering of stories urging Gov. Paul LePage to expand Medicaid. It seemed everyone was piling on — from Democratic lawmakers to groups such as Maine Equal Justice Partners and Maine Center for Economic Policy. Even Maine’s most notable health care and Medicaid experts such as the Bangor Chamber of Commerce and the editorial boards for the Portland Press Herald and Bangor Daily News weighed in to urge expansion.

The arguments are compelling: Why pass up such a sweet deal to capture more federal dollars? More people will be covered, which will lower Maine’s uninsured rate. As a result, charity care for hospitals will likely be reduced. Senate President Justin Alfond, D-Portland, went so far as to say expansion is “morally the right thing to do,” and the BDN opined that opposing the expansion does not make “ethical sense.” The Portland Press Herald pointed to the conservative Heritage Foundation report that Maine would save $690 million dollars by expanding Medicaid.

As much as I hate to let facts get in the way of a good argument, I simply can’t resist.

Let’s start with the Heritage Foundation number, which was anything but a true “report,” nor was it intended to be. The Heritage Foundation produced a microsimulation model to replicate a 2012 Kaiser Foundation study that showed Maine would save $690 million by expanding Medicaid in order to identify the assumptions used in the original study. They then released a paper citing Maine when challenging savings assumptions and further warning that the projected savings are “highly speculative.” It’s also worth noting that the Kaiser study itself notes that they don’t have state specific data on costs that aren’t reflected in its study.

One point raised by the Heritage Foundation is that reductions to charity care spending are not automatic but require state lawmakers to enact explicit payment cuts. Heritage analyst Nina Owcharenko points out: “These savings are also contingent on states enacting legislation to further reduce uncompensated care funds (Disproportionate Share Hospital [DSH] payments).” The report then points to cuts to Medicaid already embedded in Obamacare that are likely to increase pressure from the hospitals and clinics lobby to maintain if not increase state spending. They further point to Maine as an example that expansion does not historically translate to reduced charity care spending.

In fact, Maine’s Department of Health and Human Services commissioner pointed out in testimony to the Florida Legislature in February that charity care and bad debt at Maine hospitals grew more than 220 percent from $67 million in 2002 to $215 million in 2011 after Maine expanded Medicaid for childless adults in 2002. The Medicaid expansion under Obamacare also applies to able-bodied childless adults up to 138 percent of the Federal Poverty Limit versus 100 percent under Maine’s 2002 expansion. We also know that this is an expensive population costing more than double parents in the same income bracket. In the commissioner’s testimony, she shows that for fiscal year 2012, childless adults cost more than $5,000 per member compared with less than $2,500 for parents in the same income bracket.

As for the argument that expansion will reduce the number of uninsured, during the same timeframe from 2002-2011, the uninsured rate in Maine remained stagnant at around 12 percent. Medicaid enrollment did increase from 16 percent to 23 percent, but this was largely due to a shift from those with private coverage to government coverage. Private individual coverage rates over this time fell from 8 percent to 6 percent, and private employer coverage rates dropped from 66 percent to 61 percent. If this pattern repeats, further expansion under Obamacare will shift more people on private insurance to Medicaid.

The promises made to justify expansion not only did not come to fruition, we also failed to keep the promises we made to the population targeted by the expansion. Commissioner Mary Mayhew pointed out in her testimony that as of 2011, 10,749 childless adults are enrolled in MaineCare while 24,331 sit on a waiting list for services. Unfortunately, they are not alone. There are 3,100 disabled and elderly also waiting for services, while nearly 11,000 able-bodied residents currently receive benefits. Given the national debt and deficit spending problems, can we depend on stable funding, or will these waiting lists eventually grow even larger?

That brings me to the moral argument. As pointed out by the Heritage Foundation, even absent challenging the Kaiser reports assumptions, they show 40 of 50 states will see increased costs as a result of expansion, not to mention the significant increase in federal spending. By pretending federal dollars amounts to “free” money, we are making promises we have no chance of keeping at the expense of future generations.

We also have to ask ourselves whether we are creating the right incentives in our society by allowing dependence over promoting opportunity and failing to provide an adequate safety net for the most vulnerable in the process.

Expanding Medicaid is neither a win for Maine nor for our nation. This amounts to shouldering our children and future generations with obligations for promises we cannot keep, based on assumptions that have already proven false. Maine should not take the bait. We should urge our leaders to reject expansion.

Joel Allumbaugh directs the Center for Health Reform Initiatives at the Maine Heritage Policy Center and is a practicing health insurance broker and consultant.

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