Commentary

MaineCare Expansion – Ideological Blind Faith

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There are plenty of differences between the Maine gubernatorial candidates this election. Whether it concerns tax, labor, business or welfare policy the differences are many and clear. One particular issue, however, looms larger over the others and illustrates best the clear choice between Governor LePage and his two contenders – MaineCare.

Both Eliot Cutler and Mike Michaud have promised to dramatically expand this welfare program using temporary ObamaCare dollars and despite MaineCare’s exorbitant long term cost and difficult history.

Our largest program

MaineCare is the name we give Maine’s Medicaid program – the third largest Medicaid program in the country.

It is by far our state’s largest single program and it presently eats up one quarter of the state budget, starving out all other programs, departments and spending. It is the reason we have budget shortfalls every year; why we can’t spend enough on our roads or on education; why there is never enough in the “rainy day fund” and why we must resort to budget balancing “gimmicks” such as bonding for current expenses, borrowing from the highway fund, and shifting expenses to the next fiscal year. Ultimately, MaineCare is the reason Maine’s taxes are so high.

All of this puts a strain on Maine families, businesses and individuals and ultimately takes a heavy toll on our economy.

Hospitals and healthcare providers suffer, too, as Medicaid is notoriously slow in paying its bills. When it finally does – if it does – Medicaid only pays around 66% of the cost of any treatment.  The other 34% of the cost must be made up through cost shifting to everyone else who either pays directly or through private health insurance.

And when the state can’t keep up with its MaineCare bill, it comes back to haunt us as our ever-growing hospital debt. Only recently, Governor LePage, after months of contentious deliberation with legislative Democrats, was finally able to pay off the accumulated hospital debt of around $500 million.

Everybody pays dearly for this program except for, of course, the actual enrollees. They pay no premium, no co-pay and no deductible. It’s absolutely free. However, MaineCare might not be such a great deal for them.

Recent studies by the University of Virginia, the state of Oregon and several others have found that outcomes for patients on Medicaid are fair at best, much worse than with private insurance and often worse than with no “coverage” at all.

And for some it is anything but free – the Medicaid Estate Recovery plan could cost you your house and all your assets. All recipients should read the fine print!

Myths, come-ons and facts

The promises to expand our already unsustainable Medicaid program are enticing and familiar – Maine’s uninsured rate will drop; there will be less charity care, fewer emergency room visits; and the most outrageous claim of all – expanding welfare will create economic stimulus.

Sadly, none of this is true. Maine’s Medicaid expansion and expansions in other states have proven it. We now know that emergency room visits actually go up and that there is no significant change in charity care or our uninsured rate.

The “free” ObamaCare money doesn’t cover all of the associated costs, either. Recent expansions in Arkansas, Rhode Island, and California are dramatically over budget, reaffirming that these expansions are unaffordable. And, as the federal reimbursement rate drops off as promised, this situation will certainly not improve.

Even without the proposed expansion, MaineCare is still expected to continue to grow dramatically and costs to all involved will escalate. With the expansion, however, the future costs and debt will explode.

That means not only will our other budget priorities – roads, schools, environment, the truly needy – continue to languish, but taxes will have to be raised. We can safely predict increases and/or expansions to our sales, meals and lodging taxes, increases to our already high income tax and indirect increases to our property taxes as state funded programs and revenue sharing are squeezed.

Blind faith

Even with this history of economic misery these two wannabe leaders of Maine, Michaud and Cutler, are telling us it is the direction we must take and that it is “morally the right thing to do” and “a wise investment.” This is called ideological blind faith. It ignores the strained budgets, higher taxes and debt of the past and relies instead on “hope and change.”

There are alternatives.  First, we need to bring our Medicaid program back down to the national average both for what is covered and who is eligible. That step alone could balance our budget.

Second, there are alternatives for the uninsured. More than half of the proposed 70,000 expansion recipients could get very inexpensive subsidized ObamaCare insurance, many for as little as five dollars per month. Also, Federally Qualified Health Care centers give free or subsidized care for all. Finally, physicians associated with hospitals have charity plans available.

MaineCare is a vital health program for our most needy. Its history, however, is plagued with economic stress and lackluster performance. It needs reform, not expansion. Expanding it in these precarious economic times would be irresponsible, unnecessary and disastrous.

Jonathan McKane lives in Newcastle and served four terms in the Maine House of Representatives. A previous version of this column appeared in the Portland Press Herald

Sources:

 

Medicaid enrollmenthttp://kff.org/medicaid/state-indicator/medicaid-enrollment-as-a-of-pop/

70% payment of serviceshttp://kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index/

Uninsured, charity care, http://www.centralmaine.com/2013/02/11/mayhew-cautions-florida-lawmakers_2013-02-11/

 

Reduced  charity care –  Charity care has increased from $67 million in 2001, when this debate took place, to $196 million in 2011.

 

Fewer uninsured Mainers –  The uninsured rate stayed the same, around 12 percent from 2002-2011, as many dropped private coverage for Medicaid.

 

Less ER usage –  CDC: “Medicaid beneficiaries were more likely to have had at least one ED visit in a 12-month period than persons with private insurance and the uninsured.”

USM’s Muskie School: “There was no discernible pattern associating high or low ED [emergency department] use with . . . insurance status.”

Harvard and MIT: ER usage among Medicaid recipients was actually 40 percent greater than among the uninsured after Medicaid expansion in Oregon.

 

“The federal government will pay.” –  The federal Medicaid matching rate, or FMAP, has been reduced from 69.17 to 61.55 percent just since 2004.

The CBO even recently recommended capping Medicaid payments to the states as a means of reducing the federal deficit.

New Hampshire resisted Medicaid expansion back then, and if we had a DHHS the size of theirs today, we could eliminate the income tax.

 

Expansion will save money in the long run –  Medicaid spending has doubled as a share of our state budget in the past 15 years.

 

Less ER usage – CDC: “Medicaid beneficiaries were more likely to have had at least one ED visit in a 12-month period than persons with private insurance and the uninsured.”

USM’s Muskie School: “There was no discernible pattern associating high or low ED [emergency department] use with . . . insurance status.”

Harvard and MIT: ER usage among Medicaid recipients was actually 40 percent greater than among the uninsured after Medicaid expansion in Oregon.

 

Worse than no coverage –  http://www.nationalreview.com/articles/313120/medicaid-america-s-worst-health-care-program-avik-roy

http://online.wsj.com/news/articles/SB10001424052748704758904576188280858303612

About Jonathan McKane

Jonathan McKane is an electrician and real estate agent who has served four terms in the Maine House of Representatives from 2004 to 2012, 3 terms on the Insurance and Financial Services Committee as well as the Marine Resources Committee and as Chair of the Joint Select Committee on Regulatory Fairness and Reform.

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