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New report details devastating impacts of Question 1

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The Maine Heritage Policy Center on Tuesday, Oct. 23 released a new study on the impacts of Question 1, the Universal Home Care (UHC) ballot initiative that Maine voters will consider in November. The report, titled Universal Chaos, outlines the devastating economic impacts of the taxes contained within Question 1 and highlights the challenges of implementing the UHC program in coordination with existing programs.

Question 1 is a flawed initiative that will hurt Maine’s economy, waste resources, empower unelected bureaucrats and put Maine’s truly needy in jeopardy. Question 1 is not about helping people, it is about inserting labor unions into a sensitive relationship between elderly and disabled Mainers and the caregivers upon whom they depend to survive.

The enactment of Question 1 would raise Maine’s top marginal income tax rate to 10.95 percent, an unprecedented 53 percent increase. As a result, Maine would have the third highest overall top marginal income tax rate in the country, the highest rate at the $128,400 income level, and we would surpass Vermont to levy the highest income tax rate in New England. This drastic increase would drive talented professionals out of Maine and dissuade others from relocating here. The plain truth is that these individuals are sensitive to income tax increases, and as exhibited by the report published by the Maine State Economist, their departure will negatively impact the Maine economy for years to come.

According to the Department of Administrative and Financial Services, the taxes contained within Question 1 would impose a marriage penalty on families with joint incomes exceeding $128,400 a year and will impact 108,000 individuals representing more than 58,000 tax filings. Among these filings, about 49,000, or 85 percent, belong to married earners filing joint returns. About 3,600 of these families include a school teacher. The unsourced assertion that only 1.6 percent of Maine earners will be affected is untrue.

In addition, the eligibility standards for the UHC program are incredibly loose, essentially half of the functional eligibility criteria that exist today under current programs. The average adult user of Maine’s long term services and supports programs for which the UHC program could provide similar services needs assistance with at least 2.2 activities of daily living (ADL). Under the UHC program, seniors and disabled Mainers under age 65 must need assistance with only one ADL to be eligible.

Further, income cannot be a factor of eligibility and program recipients are prohibited from sharing in the cost of services, which is a sharp divergence from what is in place under Medicaid and state-funded home care programs. We estimate that providing services to those capable of procuring their own home care or sharing in the costs of services amounts to roughly $22.3 million annually in wasted taxpayer resources.

Given the loose eligibility of the UHC program, we estimate eligibility could be as high as 22,900 Mainers. Depending on the care model under which services are delivered, total program costs would vary between $268 million and $375 million.

The stipend for family caregivers established under Question 1 also appears ripe for abuse given the loose definition of family member and the prevalence of fraud within existing programs. Other organizations in Maine estimate that family caregivers in our state provide up to $2 billion in uncompensated care annually. Given that projected revenues are only $310 million, the program is not truly “universal” and could not possibly provide care or stipend to everyone who qualifies. To do so would require rationing of services or additional tax increases on hardworking Mainers.

The report also examines some of the issues that have played out in the media, including the design of the Universal Home Care Trust Fund Board and the disclosure of protected health information.

In response to criticism concerning the design of the UHC Trust Fund Board, proponents of Question 1 have claimed it mirrors the Maine Potato Board. This could not be further from the truth. The Maine Potato Board uses revenues collected by potato growers to benefit potato growers. An excise tax is imposed on potatoes to help market Maine potatoes to the rest of the world. Potato growers are the only ones who are subject to the tax or benefit from its collection. The Maine Potato Board, by design, is held directly accountable to those who fund it.

By contrast, the UHC program collects taxes from the 108,000 individuals and families who would not be represented on the Board unless they are a home care provider, employed by a home care provider or are an individual provider, or receive services under the program. The vast majority of those who pay into the UHC program will not reap its benefits or be represented on the Board that collects their tax revenues. The design of the Board under Question 1 constitutes taxation without meaningful representation, and in no logical sense can it be compared to the Maine Potato Board.

As it relates to the disclosure of protected health information, Question 1 is setup backwards to how a Board concerned with the privacy of those it serves would operate. Proponents claim that there’s an opt-out built into the law, which there is, however this opt out does not prevent the initial disclosure of protected health information. Under Question 1, it is DHHS’ duty to disseminate to the Board lists of everyone who belongs to a constituency as defined under the law, and the Board may disseminate these lists to recognized constituency associations.

These disclosures potentially violate HIPAA for the constituency comprised of individuals who receive care under the program. HIPAA assures privacy unless an individual chooses otherwise. Therefore, recipients of home care services under Question 1 should be required to opt-in to communications for the Board and constituency associations to receive their contact information, rather than opt out of communications as is the current design.

These individuals can still vote in Board elections whether or not they receive communications from the Board or constituency associations. Question 1 is framed in this manner – opt out versus opt in – to give unions access to all individual provider’s contact information.

The inclusion of the provision that requires all individual providers of home care to be considered state employees for collective bargaining purposes is troubling and likely the impetus for Question 1. The Service Employees International Union, which benefits greatly from dues skimming home care and child care providers in other states, has the most to gain from the enactment of Question 1. If the SEIU did not stand to benefit from the enactment Question 1, they would not be bankrolling Mainers for Homecare or asking researchers at the University of Southern Maine to produce a study for implementing the program. The SEIU contracted for the study because they have the most to gain from Question 1.

Trying to implement the Universal Home Care Program in coordination with existing programs when eligibility standards are so weak, coupled with the devastating economic impacts of the proposal, spells chaos for any Board tasked with implementing this program. Question 1 is so complex that it cannot be reduced to a single sentence on a ballot and be fully understood.

Unfortunately, the lax rules surrounding Maine’s ballot initiative process allow flawed proposals like Question 1 to be put forward for statewide vote. Hopefully Maine voters will be equipped with the information they need to make an informed decision in November.

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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