By Chad Grignon
Ask any Maine business owner, and they’ll tell you one of the hardest parts of operating in our state is the cost of providing health insurance for employees. The numbers bear this out; according to the Centers for Medicare and Medicaid Services, the growth in per capita expenditures for healthcare in our state has outpaced the national average, annual inflation, and even Maine’s median household income since 2001.
Among the primary drivers of these costs are the big hospital systems that fail to make
enough from Medicare and Medicaid, and then compensate by shifting costs onto
employers. Northern Light Health appears to be doing just that, asking commercial
payors to pay significantly higher per unit rates and increasing these rates at a faster
clip compared to Medicare and Medicaid payments.
Despite NLH’s excuses, it is their own poor management that has landed them in the
financial straits they are in now. Maine employers shouldn’t be forced to bail them out.
As most people are aware, Maine expanded Medicaid, also known as MaineCare
Expansion, in 2019. This was supposed to be a boon for Maine’s hospitals because it
would reduce the amount of uncompensated care they had to provide. Unsurprisingly,
hospitals— including Northern Light Health—were huge supporters of Medicaid
expansion in Maine for that reason. The big hospitals led us to believe that the money
they saved by reducing uncompensated care would be redirected toward savings for
consumers.
Unfortunately, this hasn’t panned out at NLH. Northern Light’s payments from Medicare
and Medicaid have lagged behind the other large health system in the state,
MaineHealth. As a result, NLH is now asking employers to pay even more for their
employees’ healthcare.
Northern Light Health has publicly stated that underpayments from Medicare and
MaineCare are the biggest cause of its financial woes. But this ignores the fact that
commercial payors pay significantly more per unit than Medicare and MaineCare, and
those rates are increasing faster over time.
Clearly, NLH is shifting its costs from government underpayments onto Maine
employers. This is unsustainable. After all, these rising costs are ultimately paid by
businesses and working families in our state. Businesses forced to pay more take a hit
to their bottom lines, hurting the local economy, all while employees see higher
premiums and out-of-pocket costs.
Ultimately, Northern Light Health’s real problem is poor financial management. After all,
other health systems in Maine are faring much better under the same conditions. For
example, IRS 990 filings reveal that NLH’s Eastern Maine Medical Center failed to optimize available reimbursement from government payors, recovering just 67% of
costs, when MaineHealth’s combined Medicare and Medicaid payments were close to
80% of costs during the same period. If NLH achieved the same yield on Medicare and
Medicaid that MaineHealth delivers, NLH could add nearly $80 million in net patient
service revenue to its financials annually—all without increasing volume or shifting costs
onto employers.
The bottom line: we need to address the underlying root causes of NLH’s financial issues
before asking Maine businesses to pay more. We can’t allow NLH to take “the easy way
out” by cost-shifting its problems onto employers and working families.
Chad Grignon is the owner of Pine State Drilling, and a former Maine state representative. He lives in Athens, Maine.
