Expert gives HHS Committee reality check on Medicaid expansion


GA reportAUGUSTA – Gary Alexander, founder and president of The Alexander Group, on Tuesday presented his report on a proposal to expand Maine’s medical welfare program to the Legislature’s Health and Human Services Committee.

The report, unveiled Friday, predicts enrollment in Medicaid, also known as MaineCare, will skyrocket beyond previous estimates should lawmakers agree to expand eligibility in the program pursuant to the Affordable Care Act (Obamacare). The report also said expanding Medicaid would cost Maine taxpayers $807 million over the next ten years—far more than previous estimates.

Democrats initially attempted to bar Alexander’s testimony to the HHS Committee, but they recanted over the weekend after receiving pressure from both Republican and Democratic leaders.

Even without the weekend exchange, the event was bound to be testy.

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Top Democratic lawmakers have assailed Alexander since learning of his no-bid contract with DHHS, disparaging the former Secretary of Pennsylvania’s Department of Public Welfare and Rhode Island’s Department of Health and Human Services as a “tea party” consultant. It remains unclear what exactly Alexander’s connection to tea party groups might be.

Alexander, for his part, has irked Democrats by presenting some inconvenient facts regarding MaineCare expansion. His first report, which cost the state of Maine $54,000, examined how MaineCare’s cost and enrollment would change over the next ten years with and without an expansion of eligibility. While Democrats have claimed Medicaid expansion would be a net spending reduction, Alexander says such a move would place an increasing strain on Maine’s general fund over the next ten years.

One of the major arguments Democrats have relied on in making the case for expansion is federal funding available under Obamacare for the first three years. The federal government has promised to pay 100 percent of expansion’s cost in those years, but the cost sharing drops to 90 percent thereafter. According to Alexander, there is a significant risk that the President Barack Obama or his predecessor may reduce federal reimbursement rates for the program.

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At issue if the Federal Medical Assistance Percentage (FMAP), which is the amount of money the states receive from the federal government for certain programs, including Medicaid.

[RELATED: Frary: Maine’s Medicaid Expansion Follies…]

“Maine’s FMAP has been moving in a downward trajectory for the past ten years with the exception of [American Reinvestment and Recovery Act],” said Alexander. “Each percentage point drop results in about a $25 million reduction in federal funds,” he said. “That loss needs to be made up from the general fund.”

The possibility of future reductions is realistic, he said. “Just in Nov. of 2013, the CBO projected that one of the ways to control the federal budget would be to cut Medicaid spending, and they speak about a reduction in matching rates that states would receive,” he said. “The reason why this is important is because it does have implications for the federal money that states receive from Washington, D.C.”

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In addition to the possibility of the federal government breaking another Obamacare promise, Alexander pointed up three other risk factors: Poverty growth, per member costs for Medicaid beneficiaries, and decreases in private insurance enrollment. All three of these variables could make Medicaid expansion a costly endeavor for Maine, but the last one became a sticking point at today’s hearing.

Democrats have so far said their expansion plans would immediately cover 70,000 Mainers, but that’s just the currently uninsured population. Alexander’s report points out that nearly as many individuals who currently have private insurance could opt for cheaper Medicaid coverage or see their employer-based coverage terminated.

In an interview prior to the hearing, Sen. Margaret Craven (D-Androscoggin), co-chair of the HHS Committee, said she was “delighted” to have Alexander before the HHS Committee, but does not think the report was credible.

Craven said there has never been an instance of individuals leaving private insurance to enroll in Medicaid. She confirmed this upon further questioning and repeated the claim during the hearing.

Joel Allumbaugh, health care policy director for The Maine Heritage Policy Center, said U.S. Census figures tell a different story.

“Senator Craven is stating that there has never been an instance of someone leaving private insurance to enroll in Medicaid.  I would like her to explain U.S. Census Bureau numbers showing that while Medicaid in Maine grew from 16 to 23 percent from 2002-2011, the uninsured rate remained stagnant at around 12%,” Allumbaugh said. “During that same time period, however, individual private insurance enrollment fell from 8 to 6 percent and private employer insurance coverage fell from 69 to 61 percent.”

Sen. Jim Hamper (R-Oxford), who remained silent throughout the committee hearing, issued a statement afterward urging his colleagues to take the report seriously.

“If we ignore the facts presented in this very thorough report, we do so at our own peril,” he said. “We have been down the road of expansion before, and it resulted in more than $700 million in hospital debt that we were just recently able to pay off.”

“The ones who will be left behind in Medicaid expansion are those who need our help the most,” said Hamper. “They are the ones with developmental and physical disabilities, the elderly, and others who are languishing on waiting lists for assistance. The Alexander Report highlights how putting more people on an already overcrowded system will make accessing services even more difficult for them.”

Steve Robinson
Editor, Maine Wire


  1. Given an opportunity to walk back her absurd claim that nobody has ever dropped private insurance to sign up for (free) Medicaid coverage, Sen. Craven repeated her foolish assertion, raising questions about her competence to chair a committee that oversees more than half of state government.

  2. I personally know of at least 3 people that dropped our private employer funded insurance for medicaid coverage because they have better coverage (less deductibles and copays). The claim that noboday has ever dropped private insurance is completely false! If our company has seen it, others have too. (and we pay 100% of insurance premium!)


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