Maine Should Be Wary of Medicaid Expansion

From the House Republican Office:  Washington’s fiscal irresponsibility threatens another bait-and-switch on Mainers

AUGUSTA – House Republican leadership says that Maine’s decision about whether to accept federal dollars to expand Medicaid is one that should consider the fiscal health not just of Maine, but of America.

The federal government had a $1.3 trillion deficit in 2012, borrowing 35 cents out of every dollar it spent.  The CBO had projected a smaller deficit for fiscal year 2013, but in just the first two months (October and November 2012) the deficit far outpaced projections at $292 billion, which is spending at the rate of $1.75 billion for the year.  With a national debt of about $16.9 trillion now exceeding America’s gross domestic product (GDP) and economists agreeing that debt that exceeds 85-90 percent of GDP has a negative effect on economic growth, the United States is in dire financial straits.

“We can all talk about what kind of a deal this is for Maine, and certainly those of us at the State House were all elected to do what’s in the best interest of our state, but I hope we all consider the pros and cons of Medicaid expansion not just as Mainers, but as Americans,” said House Republican Leader Rep. Ken Fredette (R-Newport).

“Here in Maine, our constitution requires a balanced budget.  We are working incredibly hard right now to meet that requirement.  When I look at Congress and the president in Washington, I see politicians who take trillion-dollar shortcuts and ignore tough decisions.  Their inability to pass a budget in four years, combined with the incomprehensible debt they’re leaving our children, is a profile in cowardice,” said Fredette.

According to The Kaiser Foundation, Medicaid expansion is projected to cost the federal government almost $1 trillion and the states $76 billion over the next decade.  While Maine is projected by the Heritage Foundation to be a net beneficiary of the expansion over the first 10 years, there are two reasons to be concerned.

First, MaineCare, Maine’s Medicaid program, has consistently gone over-budget—in the upcoming biennium, by about $400 million.  That represents about two-thirds of the total savings Maine is projected to realize over the course of the decade.  MaineCare cost overruns could easily destroy any fiscal incentive Maine has in accepting Medicaid expansion.

Second, the expansion law as proposed only lasts 10 years.  It must be reauthorized at that point, and considering the state of the federal budget, it is reasonable to assume that the then-90 percent share of Medicaid paid for by the federal government made be significantly slashed or eliminated.  Even if not constrained from controlling costs under “Maintenance of Effort,” we have seen how difficult, politically, it is to bring MaineCare costs under control.  Medicaid expansion is a door that, once opened, may never be closed, with Congress pushing Maine off of a fiscal cliff after the first decade of the program.  Furthermore, within those first 10 years, there is nothing to constrain Congress from breaking their promise of 90-100 percent federal matching rates.

“We have the second-highest Medicaid enrollment level in the nation—27 percent of the population—because the federal government keeps dangling bait in front of us and we keep on taking it,” continued Fredette.  “It’s given us yearly nine-figure cost overruns at Maine’s Department of Health and Human Services and saddled our hospitals with $500 million in unpaid Medicaid bills.  Maine cannot afford more broken promises and bait-and-switch hard-sells from Washington.”

“The effect of this spending expansion on Maine’s finances and taxpayers must be carefully considered,” said Assistant House Republican Leader Alexander Willette (R-Mapleton).  “And somebody has to be thinking about the national debt, because obviously Congress is not.  That extra trillion dollars in spending must either be borrowed from China or printed, and that affects Maine no matter how much ‘free money’ Congress throws at us.”

By Maine House GOP

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