Medicaid Expansion

Maine’s dysfunctional experiment with Medicaid expansion

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This November, Maine voters will be asked whether they want to expand Medicaid eligibility to able-bodied, childless adults between the ages of 21 and 64 who earn up to 138 percent of the federal poverty level (FPL).

In 2002, under Governor Angus King, Maine expanded Medicaid eligibility to childless adults earning up to 125 percent of the FPL. This move was supposed to boost Maine’s economy, reduce the uninsured rate, end charity care at Maine hospitals and improve the health care system for every Mainer.

However, none of these claims came to fruition, and unfortunately, the same arguments are being used in favor of Medicaid expansion today.

Medicaid expansion in 2002 was supposedly going to grow Maine’s economy, however the promised economic boost was never realized. In the three years prior to expansion, Maine’s average annual GDP growth was roughly 6 percent. In the three years following Medicaid expansion, the rate slowed by roughly one-third, falling to about 4 percent. In other words, there was no “huge economic boost” after expansion in 2002, as the growth rate of Maine’s GDP actually declined.

The same result was seen regarding Maine’s uninsured rate. The purpose of Medicaid expansion was to provide health insurance to a previously uninsured segment of the population. However, before expansion in 2000, Maine’s uninsured rate hovered around 12 percent. In 2010, the uninsured rate remained at the same level.

This is largely due to a phenomenon called “crowd out.” Crowd out occurs when public health insurance programs are expanded and those who previously had private insurance decide to enroll in the government program rather than personally finance their health insurance. Instead of insuring more people, Medicaid expansion in 2002 resulted in many privately insured Mainers opting into public health insurance, leaving taxpayers responsible to foot the bill for their decision once eligibility widened.

Today, supporters of the ballot question insist only 70,000 Mainers will enroll under expansion. However, according to the Census Bureau, there are 144,000 Mainers who fit the eligibility criteria, and another 80,000 who are close enough to the income threshold that they could marginally reduce their earnings in order to obtain public health insurance.

Proponents also claimed that charity care at Maine hospitals would decline because more Mainers would be insured, but much like the rest of their claims, this one does not withstand factual scrutiny. While Maine’s uninsured rate continued to hover around 12 percent, charity care at Maine hospitals soared in the years following expansion.

In 2002, Maine had just over $50 million in uncompensated care at hospitals throughout the state. By 2011, charity care at Maine hospitals skyrocketed to nearly $200 million. This hospital debt, totaling roughly $500 million, can be attributed to Maine’s expansion of Medicaid in 2002. The debt wasn’t paid off until Gov. Paul LePage successfully restructured the state liquor contract.

Everything proponents of Medicaid expansion have claimed about the program is patently false. After Maine’s experiment with Medicaid expansion in 2002, there was no economic boom. The uninsured rate remained flat. Charity care at Maine hospitals went through the roof, and Mainers had the foot the bill for healthy people to enroll in government subsidized health insurance.

The math is simple; Maine taxpayers cannot afford Medicaid expansion.

About Jacob Posik

Jacob Posik, of Turner, is a policy analyst for the Maine Heritage Policy Center. He can be reached at jposik@mainepolicy.org.

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