AUGUSTA, Maine — The Legislature’s Appropriations and Financial Affairs Committee on Tuesday unanimously approved a bill offered by Gov. Paul LePage that would use revenue bonds to pay off Maine’s $183.5 million debt to its hospitals.
Paying the debt for services provided under the state’s Medicaid system, MaineCare, has been a top priority for LePage. The governor’s plan uses revenue from a renegotiated contract for the state’s wholesale liquor business.
LePage vetoed an earlier measure that linked the repayment plan with an expansion of MaineCare as allowed under the the federal Affordable Care Act. Legislative Democrats have made Medicaid expansion a priority this session, but LePage and Republican legislators vehemently objected.
The governor also has said he would not issue any more than $200 million in voter-approved bonds until a deal is in place to pay the hospital debt.
The state’s share combined with federal matching funds would see the state’s 39 hospitals paid more than $480 million in total.
The committee also learned Tuesday that interest rates in the bond market had increased since the governor first offered his proposal, and over the 10-year term of the bond the state would pay an additional $3 million to $4 million in debt service.
“This delay had consequences,” Adrienne Bennett, a spokeswoman for LePage, said Tuesday. “And not only do we now know that there is a $3 million to $4 million additional cost because of it, we know that good construction jobs have been held up as well as jobs at hospitals.”
Bennett said those increased costs “were a direct result of the games that Democrats wanted to play.”
But Democrats on the committee said the rates in the bond market would have gone up regardless.
“I think we are all very pleased that we are at a point where we can vote this bill out and make sure that our hospitals are paid,” said Rep. Peggy Rotundo, D-Lewiston, House chairwoman of the committee.
She said paying the hospitals wasn’t a partisan issue and that a law passed under former Gov. John Baldacci did set in place a system so the state has been paying for its MaineCare costs on time. If the bill considered Tuesday by the Appropriations Committee passes, all the outstanding debt also would be paid, she said.
“All of us, from the very beginning, have wanted to pay the hospitals,” Rotundo said. “This final payment is something all of us wanted to do.”
The debt needs to be paid by Oct. 1 of this year to take advantage of a higher federal Medicaid reimbursement rate. Failure to make that payment would cost the state an additional $5 million. That means lawmakers have until the end of June to get the bill passed and signed into law.
Rep. Dennis Keschl, R-Belgrade, another member of the Appropriations Committee, said the prior bill that linked the debt payment with a Medicaid expansion would not have gone into effect until after that Oct. 1 date.
Keschl said lawmakers now had time, if they acted quickly, to avoid that additional cost.
The bill, sponsored by Sen. Patrick Flood, R-Winthrop, will head to the state Senate.