Medicaid expansion is here. Now what?


For the second time in 17 years, Maine has expanded Medicaid. Governor Mills has directed DHHS to take swift action to enroll newly eligible able-bodied adults, and at least 70,000 people are now able to sign up for free health care.

Gov. Mills cloaked her executive order in rosy rhetoric, but the stark realities of funding Medicaid expansion can’t be ignored for long. Now that Medicaid expansion is here, we must find a responsible and sustainable way to fund it.

Maine’s own previous experiment with expanding Medicaid to able-bodied adults shows that Maine taxpayers will soon feel the fiscal consequences of this decision, and the experiences of other expansion states provide further warnings.

On average, states that have expanded Medicaid have enrolled more than twice the expected number of recipients and faced far higher per capita spending than predicted. According to a 2018 analysis, the cost overruns from Medicaid expansion total 157 percent — in other words, expansion is costing states more than two-and-a-half times what was originally projected.

These facts cast serious doubt on the Mills administration’s claims that tobacco settlement funds and a modest budget surplus will be adequate to cover Medicaid expansion, even in the short-run. Gov. Mills and her legislative allies have failed to articulate a workable long-term funding plan, even as analysts warn that ballooning Medicaid budgets are destabilizing state finances and putting us on the path to a fiscal crisis in the next few decades. If history is any guide, Medicaid expansion will quickly be followed by sizable tax increases on working families.

Maine’s own experiment with Medicaid expansion under Governor King demonstrates that Gov. Mills’ funding schemes are unrealistic. As MHPC detailed before the referendum, virtually every substantive claim made by expansion proponents in 2002 was proven wrong or overblown in the years that followed.

The economic boom that expansion advocates promised never materialized (in fact, GDP growth slowed in the aftermath of expansion). The uninsured rate did not significantly decline, as many who previously had private insurance opted for free, government health care. Uncompensated care at Maine’s hospitals, instead of falling, grew dramatically.

Studies failed to find any indication that expansion reduced mortality rates or improved overall health. Enrollment estimates were greatly exceeded, contributing to a more than doubling of Maine’s Medicaid budget from 2002 to 2011. The inflation-adjusted per capita state and local tax burden increased by $174 over the same period. In failing to acknowledge this dismal record, the Mills administration is not being candid with Mainers.

Gov. Mills shouldn’t try to sugar-coat it. As Medicaid spending continues to outstrip overall inflation and personal income growth, Mainers will see more and more of their hard-earned paychecks going to finance medical care for childless, able-bodied, non-elderly adults.


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