Maine’s $119 million budget hole linked to Medicaid use, underperforming LePage savings initiatives

Posted Jan. 14, 2014, at 7:14 p.m.
The State House in Augusta in winter 2006.
Bridget Brown | BDN
The State House in Augusta in winter 2006.

AUGUSTA, Maine — Republicans and Democrats have been sparring for weeks over the causes of the state budget shortfall, which on Monday evening was pegged by Gov. Paul LePage at approximately $119 million.

While Republicans have blamed higher-than-expected use of some Medicaid programs, Democrats have alleged mismanagement within the Department of Health and Human Services and failed LePage administration budget initiatives.

As it turns out, both parties are partially correct, according to new information that Finance Commissioner Sawin Millett provided to lawmakers and reporters Tuesday afternoon.

Millett said that at least $108 million of the $119 million shortfall can be attributed to spending on MaineCare, which is Maine’s version of Medicaid. Millett said that while overall enrollment in MaineCare has declined in recent years, use of some services by the remaining enrollees has increased. In particular, there has been higher-than-forecast use of hospital outpatient care, laboratory services, pharmacy services, residential services, rehabilitation services and home- and community-based care.

And there is another factor contributing to the shortfall: Some initiatives spearheaded by the Department of Health and Human Services and the LePage administration have not achieved the savings that were hoped for, said Millett.

“The department is committed to achieving savings wherever possible and particularly to see through to completion well-crafted initiatives that are based on good data and responsible projections,” reads a document provided by Millett to lawmakers and reporters. “The department will continue to aggressively implement the saving initiatives that are booked and we are optimistic there will be a higher percentage of savings achieved, as reflected in our forecast for [fiscal year 2015].”

Millett said he could not provide details about what underperforming DHHS initiatives have contributed to the shortfall nor an estimate of what percent of the shortfall derives directly from those initiatives. He said he expected more specifics to be available in the next few days as he and DHHS Commissioner Mary Mayhew meet with lawmakers on the budget-writing Appropriations Committee.

Millett said that despite the problem of the shortfall, there are signs that some aspects of state government’s fiscal condition are improving, at least from the perspective of policymakers who want to see reductions in social service programs. MaineCare, according to data from last year and projections about this year and next, is growing at a significantly lower rate than the national Medicaid average and state and federal spending on the program is budgeted to be $46 million less next year than in the current year.

Republicans and Democrats greeted the new details from Millett with the same arguments they have been voicing for weeks.

“This is the result of increased usage of the Medicaid program in large part, which is the same program the Democrats want to expand,” said Senate Minority Leader Mike Thibodeau, R-Winterport, referring to the expansion of Medicaid in Maine under the federal Affordable Care Act, which has been debated in Maine for more than a year. “This structural budget gap exists and it has to be dealt with.”

Thibodeau’s Democratic counterpart, Senate Majority Leader Troy Jackson, D-Allagash, sharply criticized the administration for continuing to delay giving lawmakers detailed information about the budget shortfalls, particularly in light of the fact that LePage has said he will not submit a supplemental budget bill to deal with the shortfalls as numerous governors before him have done.

“This is not nearly the information we need to do a supplemental budget,” said Jackson, holding up six pages of documents distributed by Millett on Tuesday. “We feel this is mismanagement. The governor needs to do the hard job he was elected to do.”

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