June 22, 2018
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Does Medicaid expansion really penalize Maine taxpayers?

By Trish Riley, Special to the BDN

The LePage administration’s letter to the federal government seeking ways to bring new Medicaid funding to Maine is encouraging. It has stimulated new discussions about the Affordable Care Act, the role Medicaid plays in Maine and how federal funds support the program.

In the current debate, we hear that Maine has seen a reduction in federal reimbursement. Medicaid, called MaineCare here, is a shared responsibility. Today the federal government provides about $62 for every $38 the state spends on Medicaid services. Each year a formula, based on per capita income, is calculated to determine how much federal money a state will receive.

Maine is treated just like all the other states and, like about half of them, has seen its federal funding decrease. Conversely, some years our federal rate increases. The formula is cyclical, reflecting income changes in the states. The funding formula should be updated, but only Congress can do that.

Congress enacted a one-time, temporary Medicaid increase to help states through the recession. Maine and all states benefited from that temporary payment bump that began October 2008, knowing it expired in June 2011.

The Affordable Care Act now provides states with 100 percent federal funding for three years and 90 percent thereafter if they cover low-income adults who were previously ineligible for Medicaid. Some argue that the act penalizes states such as Maine: Because adults were already covered here, Maine cannot qualify for this new federal funding.

But in 2009, during the Affordable Care Act debate, states that were “early expanders” of Medicaid raised similar concerns. Working together, and with congressional and White House staff, we secured a special provision in the law. Maine will receive more federal funding (81 percent versus the current 62 percent) to cover childless adults in 2014. That amount increases each year until it reaches 90 percent, just like other states receive in 2020 and beyond.

The federal government will pay fully for those on the waiting list for services. There is another pathway in the law that may even qualify us to receive full funding for adults already on the program.

As early expanders, we knew we’d see savings through the Affordable Care Act. Some of those now served by Medicaid could instead became eligible for private insurance premium tax credits offered through the new insurance exchanges and paid for by the federal government, not the state. The savings to states such as Maine have been cited by liberal and conservative sources alike.

In some states, parents will also be funded at 100 percent for three years when the Affordable Care Act is fully in place in 2014. But all states already covered some parents (the median is 66 percent of the federal poverty level), and 18 states, including Maine, had already covered parents above 100 percent of the poverty level. By law, no state will receive higher funding for those already covered. Much of that expansion in Maine, however, was paid by the initiative Dirigo Health, not state general funds.

The assertion that Maine taxpayers are being penalized deserves scrutiny. The Affordable Care Act provides significant new dollars for Maine, although states that had previously covered fewer people on Medicaid will see higher federal participation. But for many years, other states’ taxpayers have been subsidizing Maine as we drew down millions of dollars to cover low-income residents whose care would otherwise have been uncompensated.

And those costs to Maine’s health care providers would have been passed on and paid by all insurance premium payers. As Maine made more people eligible for Medicaid over the past two decades, Maine has secured significant federal funding — dollars that other states did not receive.

Here are the available facts: In 2011, state and federal Medicaid spending made up 28 percent of Maine’s budget, about the ninth highest in the nation. But if you look at state-only spending, Medicaid spending was 12 percent of the state’s budget, lower than about 20 other states and the national average, according to the Medicaid and CHIP Payment and Access Commission.

Certainly, whether federal or state, these are all tax dollars. These figures reflect the one-time increase in federal funding in all states. That is, all states saw federal increases and state decreases in this period, but that does not change the conclusion: State investments yield significant federal support for low-income families and the health providers who serve them.

These investments in coverage matter. As Maine’s rate of uninsured dropped, our health status improved. By 2012, “America’s Health Rankings” named Maine the ninth healthiest state and the fifth best in covering the uninsured. That’s an achievement for Maine.

There are many points of view about how to improve coverage. As we have seen in the past few weeks, the federal government is open to exploring new options. For those Mainers who feel the insecurity of no health coverage and for those who pay higher premiums to cover the costs when the uninsured require care, let’s hope the conversations between the LePage administration and the federal government can find a path forward, within the spirit and letter of the law.

Trish Riley is an adjunct professor at the Muskie School of Public Service and a lecturer at George Washington University School of Public Health.

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