Report: Medicaid expansion in Maine would cost $807 million over 10 years

Posted Jan. 10, 2014, at 3:51 p.m.
Last modified Jan. 10, 2014, at 5:18 p.m.
Gary Alexander presents his Medicaid expansion study on Friday, Jan. 10, 2014, at the Department of Health and Human Services office building in Augusta.
A. Jay Higgins | MPBN
Gary Alexander presents his Medicaid expansion study on Friday, Jan. 10, 2014, at the Department of Health and Human Services office building in Augusta.

AUGUSTA, Maine — Expanding Medicaid as allowed by the federal Affordable Care Act would cost the state an estimated $807 million over the first 10 years, according to a study conducted by a controversial consultant.

The Department of Health and Human Services in September awarded a $925,000 no-bid contract for a study of Maine’s welfare system to the Alexander Group, a Rhode Island-based consulting firm headed by Gary Alexander, former welfare chief in Pennsylvania and Connecticut.

The first segment of the study, focused on the potential Medicaid expansion, was released Friday. It was due Dec. 1 but delivered to DHHS on Dec. 16, according to a spokesman for the department.

The report highlights the fact that Maine’s General Fund is on track to be consumed by the MaineCare program, even without expanding eligibility,” Alexander wrote in a news release. MaineCare is the state’s name for Medicaid. Maine ranks third among the states for Medicaid spending as a percentage of the total budget.

President Barack Obama’s signature health care initiative required that every state would accept federal dollars to expand Medicaid to all people with incomes equal or less than 138 percent of the federal poverty level.

The expansion was a key fixture in making the total health care overhaul work, Obama said, but the U.S. Supreme Court ruled that states could not be required to expand their programs. As a result, 22 states — including Maine — have opted not to expand. An estimated 70,000 more Mainers would be immediately eligible under expansion; many of those are childless adults who lost coverage on Dec. 31.

During a news conference with DHHS Commissioner Mary Mayhew on Friday, Alexander emphasized that roughly 3,900 mentally or physically disabled and elderly Mainers remain on wait lists for services by the state.

LePage has said taking care of the wait lists should be the state’s priority, and that Medicaid expansion would make it even harder. Alexander echoed that sentiment.

“We’re always good at having ideas to add things to these programs,” he said. “The problem is we don’t always take the time to fix the problems we already have.”

Friday’s release of Alexander’s study of Medicaid expansion came after weeks of controversy, including the LePage administration’s refusal to make the report public despite having no legal right to withhold it. Media outlets and legislators filed multiple Freedom of Access requests for the document that went unfulfilled. Despite DHHS receiving the report on Dec. 16, the version released to the public on Friday was dated Jan. 10.

The Alexander Group used its own financial metrics to calculate future scenarios with and without Medicaid expansion. The report says that MaineCare spending is on pace to grow 5.5 percent each year for 10 years, even without expansion. With expansion, it would grow 7.4 percent annually. That quickly adds up, to at least $807 million over 10 years, Alexander says.

Alexander’s report also says expansion would see MaineCare enrollment grow 66.7 percent over the next 10 years, from the roughly 318,000 enrolled today to 530,200 in fiscal year 2024. Without expansion, enrollment would grow 28 percent, to 406,100, the report says.

Put another way, Alexander’s report says that by 2024, about 38 percent of the state’s population would be on MaineCare, if expansion is given the green light.

Democrats have criticized the LePage administration for giving Alexander the no-bid contract, saying the conservative consultant was hired simply because he would deliver reports that will back up the governor’s position against Medicaid expansion — something he’s done in two other states.

Medicaid expansion is a top legislative priority for Democrats, but they don’t have the numbers alone to pass a law accepting the federal expansion dollars. For that, they’ll need Republican support. Last year, LePage vetoed a bill to expand Medicaid eligibility in Maine, but majority Democrats could not garner enough Republican votes to meet the two-thirds threshold in the House and Senate required to override a veto.

Democrats have pointed to other studies — from the Heritage Foundation and the Rand Corporation, to name a few — showing that expansion would save the state millions of dollars.

Asked whether he fears Alexander’s report will sway Republicans who are considering voting for a new expansion bill this year, House Speaker Mark Eves, D-North Berwick, didn’t seem worried.

“It’s really no surprise that the governor’s tea party consultant, who he paid $1 million to, came out with what he did,” Eves said. “I think that people see this for what it is, and that is a political document.”

Rep. Deborah Sanderson, R-Chelsea, is the ranking Republican on the Legislature’s Health and Human Services Committee. She was present for Friday’s press conference, and was dismayed by Alexander’s findings.

“This solidifies our position that expansion is not something we should enter into lightly,” she said.

As welfare commissioner in Pennsylvania, Alexander oversaw a department that came under fierce criticism from Democrats in the state, including the elected auditor general, who said mismanagement at DHHS cost the state roughly $7 million per year. Advocates for the poor there also blasted Alexander for policies that resulted in nearly 89,000 children losing their taxpayer-funded health care.

In 2013, a Democratic lawmaker in Pennsylvania requested that state’s attorney general launch an investigation into any potential crimes committed by Alexander during the contracting process of a controversial restructuring of the state’s home health care payment system.

LePage has instead focused on what the embattled consultant did as welfare chief in Rhode Island. There, Alexander obtained a global Medicaid waiver from the federal government, which gave the state wide flexibility in running the program. LePage and Mayhew have argued that Maine needs similar flexibility in order to fix what they see as a broken welfare system.

When asked by reporters, Mayhew would not let Alexander comment on the controversy surrounding his company, history and report. She called the discussion a “waste of time.”

Follow Mario Moretto on Twitter at @riocarmine.

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