AUGUSTA, Maine — Democratic legislative leaders are proposing a deal that would tie the payback of Maine’s $484 million hospital debt to an expansion of the state’s Medicaid program under the federal Affordable Care Act.
The party’s legislative leaders briefed Gov. Paul LePage on the plan in a meeting Thursday, the latest development in a debate over paying back Maine’s hospitals and expanding Medicaid coverage.
House Speaker Mark Eves, D-North Berwick, said Democrats want to tie the debt payback to health care system reforms that could control costs in the long run.
“Democrats are going to repay the hospitals. It’s a top priority of ours,” he said. “As we make that final payment on our hospital debt, we’re also going to do things that address cost drivers in our health care system.”
LePage, who has made paying back the state’s 39 hospitals a top priority this legislative session and has been reluctant to support Medicaid expansion, accused Democrats on Friday of continuing to stall on the hospital debt payback.
“Maine expanded welfare 10 years ago, and we still haven’t paid that debt,” the governor said. “They know that paying our bills is the right thing to do. So why are Democrats still refusing to pay the hospitals?”
LePage unveiled his plan in January to pay off the state’s hospital debt by taking out a revenue bond backed by the state’s future liquor profits. He said he would release $105 million in voter-approved bonds he has so far refused to issue once lawmakers sign off on his debt repayment plan. The hospital debt has accrued since 2009 for services hospitals provided to Medicaid patients but for which they haven’t been reimbursed by the state.
Democratic leaders initially resisted the plan, saying the hospital debt payback and liquor contract shouldn’t be considered as part of the same bill. The party’s leaders later proposed an alternative plan tying the hospital debt payback to a renegotiation of the liquor contract. However, that plan, sponsored by Senate Democratic Leader Seth Goodall, proposed demanding an upfront payment from the winning liquor vendor rather than having the state take out a revenue bond.
In recent weeks, consensus has emerged around using a revenue bond to pay back the debt as Attorney General Janet Mills has said the approach meets constitutional muster and a nonpartisan analysis has shown the approach would also direct more revenue to state coffers than having a private company secure the capital needed to make a $200 million upfront payment.
Eves said Democratic leaders are crafting a bill that ties together a renegotiation of the state’s wholesale liquor contract, a revenue bond to repay the hospital debt and the Medicaid expansion, which has been proposed in a separate bill by Rep. Linda Sanborn, D-Gorham.
Expanding Medicaid “addresses one of the cost drivers in our health care system, which is charity care,” Eves said, referring to care hospitals provide for free to low-income patients without health insurance. “The hospitals want Medicaid expansion, and they know it would address a cost driver within their system. We really feel it’s the responsible thing to do.”
In a news release and on social media, LePage accused Democrats of “reneging” on plans to pay back the hospitals. House Republican Leader Ken Fredette also said the Democrats’ proposal “raises serious concerns.”
Eves said Democrats want to move quickly on the hospital debt repayment so Maine can pay it off before its federal Medicaid match rate drops on Oct. 1. Currently, Maine would owe $181 million, and the federal government would kick in the remainder in order to pay off the full $484 million debt. On Oct. 1, however, the federal Medicaid funding rate for Maine is expected to drop a percentage point, meaning the state would have to pay $186 million to trigger a federal match of about $298 million.
Under the Affordable Care Act, President Barack Obama’s 2010 health care reform law, Maine has the option of expanding Medicaid. Under the law, the federal government will cover 100 percent of costs for newly eligible Medicaid recipients for three years. The 100 percent funding will gradually drop to 90 percent in 2020, and states will have to make up the remaining share.
Since Maine is one of a handful of states that have already expanded Medicaid to many of the people who would be newly eligible in most other states, the state can qualify for an increased matching rate for some of the residents it’s already covering, about 10,000 adults without children.
As a result of this increased federal funding rate, a recent Kaiser Family Foundation analysis projected that Maine would be one of 10 states to see the amount of state funds it spends on Medicaid actually drop over the next decade — by $570 million, or 3.8 percent — while the federal share of Medicaid expenses would rise by $3.1 billion, or 11.4 percent.
“We have an opportunity to do something that is in the best interests of Maine people,” Eves said. “We can’t miss this opportunity, and I think to do anything other than that would be irresponsible.”
While LePage has generally opposed expanding Medicaid, his administration began discussing the possibility with federal officials after a number of other Republican governors said they would accept the federal Medicaid funds in their states.
Health and Human Services Commissioner Mary Mayhew last month sent a letter to U.S. Health and Human Services Secretary Kathleen Sebelius requesting more flexibility and more funding — 10 years of full federal expansion funding rather than the three prescribed in law — as a condition for Maine to expand Medicaid.
Adrienne Bennett, a LePage spokeswoman, said Friday the administration hasn’t yet received answers from the federal government regarding those requests.