Even though Medicaid uses a higher portion of the Maine budget than the program does in other states, Maine lawmakers would be making a mistake if they thought Medicaid’s rapidly rising cost here is unique. The Medicaid budget has shot up nationwide for a lot of reasons, including, significantly, the fact that states have had the surpluses to fund expanded health care programs. But the underlying reason for the Medicaid sticker shock in state capitols this year is the ongoing inability of Congress to do anything substantial about the number of uninsured people in the United States.
States have few tools to deal with this problem, except to use the federally matched (in Maine, it’s $2 of federal money for every state dollar) funding through Medicaid. Now, just as revenue increases no longer are hitting double-digit peaks, the bill has come due.
Ohio’s $248 million Medicaid shortfall is caused by increased costs in care per person and rising nursing home costs, according to Stateline.org, an online publication administered by the University of Richmond. Massachusetts needs $100 million more in Medicaid hospital costs to break even for the year. Indiana’s $71 million Medicaid shortfall is blamed on expanded enrollment and rising pharmacy costs. Colorado cut its Medicaid program by $12.4 million and still expects a 7 percent increase this year. California, which will get a look at its budget Wednesday, is braced for a hefty increase in what is already a $23 billion program.
From Oregon to Tennessee, New Mexico to Kentucky, lawmakers are revisiting the programs they offer under Medicaid and wondering how they will pay for them. Pharmaceutical costs are most often blamed for pushing up the cost; in Maine, that portion of Medicaid will reach $200 million next year out of a total budget of approximately $1.2 billion.
To meet Maine’s Medicaid budget without cutting benefits in a cooling economy, Gov. Angus King proposed using an additional $15 million of the state’s tobacco settlement money. Last year, lawmakers agreed to spend $15 million of that windfall on Medicaid, so that under the governor’s proposal $30 million of the $55 million settlement would now go to the health-care plan. Because the settlement money the governor proposes to shift already has been accounted for, programs such as childcare, home visits for parents of newborns, prescription drugs for the elderly and grants to fight smoking would be reduced or eliminated. It is a miserable choice to make: general health care for the poor or specific health-care programs for the poor.
Maine’s Medicaid program is more generous than many in the nation: it has expanded in recent years into optional areas of coverage for children, private nonmedical institutions, mental health and others. It has made sense to use Medicaid, rather than another state program for these services, because of the federal match. To retreat from them now is a total reduction of $3 for these important health services for every $1 saved or sent elsewhere.
The logic of using the tobacco fund money for Medicaid is clear: The tobacco industry settled with states based on their Medicaid expenses from smoking-related illnesses. Those illnesses equal about $90 million a year in Maine, well over the total tobacco settlement and three times what the governor is proposing to use from the fund for Medicaid. Supporters of the programs targeted by the governor for reduction naturally are unhappy with his choice, but the governor is on solid ground in arguing for the tobacco money’s use for Medicaid.
Lawmakers are free, of course, even encouraged to find better ways to make the budget balance without the health-care choices the King budget wrestled with. They might keep in mind three ideas: They aren’t alone; lawmakers in most other states are going through the same exercises. Congress probably won’t help them out of this problem. And so far, it appears no one has come up with any better ideas than the choices Maine lawmakers have before them.
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