MEDICAID’S SICKBED

Maine hospital officials are understandably nervous about the Medicaid cuts proposed in Gov. John Baldacci’s biennial budget, but their estimation of the size of the cuts they face may do more to divide lawmakers over the issue than bring understanding. The better choice is to keep working with the Baldacci administration to find new savings and new sources of revenue.

The Maine Hospital Association reported last week that the governor’s new budget would cut $60 million from reimbursements for hospital services provided to Medicaid patients, “significantly greater than what was originally reported as holding hospital payments to current funding levels.” The governor’s office says this is incorrect – the Medicaid budget for hospitals is flat-funded in 2004 at $75 million, down from a projected increase of $78.6 million, which, even counting the 2-to-1 federal match, doesn’t generate the kind of losses described by MHA.

Almost no one doubts that hospitals (and doctors, for that matter) receive inadequate reimbursements for the care they provide Medicaid clients, given the costs of the services provided. Maine hospitals, according to the association, were reimbursed $39 million less in Medicaid payments in 2000 than it cost to serve these patients. Underpayment was a problem even in times of budget surpluses and is felt more acutely now during a time of shortfall. But the problem is not that states don’t shovel money fast enough to cover costs but that the current system is unsustainable and that the crisis felt at hospitals can be found throughout the health care system, as anyone trying to pay for insurance can describe.

Several health-coverage overhauls will come before the Legislature this winter, all designed to cover more people at less cost per person. Any major group could stop the reform with effective lobbying. Or the various groups could come together, admit that the problem is so serious that individual concerns are less important than building a health care system that is both affordable and covers everyone. That would be an unusual occurrence in Augusta, where being aggrieved is considered a career.

But major health care reform is the only way this state, and many other states facing similar budget shortfalls and large Medicaid bills, will be able to pay adequately for hospital care without going broke in the process. The funding shortages in the proposed budget are merely the signs of a much larger problem.