Thirty-four states had Medicaid shortfalls last year, Maine among them, despite actions by all 50 states to curb Medicaid growth. The problems will grow worse in 2005 through a combination of challenges – or “touch choices” in Dirigo’s parlance – that will require lawmakers this session to examine the state’s entire Medicaid program, from who qualifies to what the program will pay for at what rate. It is not that the system is in crisis, but it is moving that way, and states that do not act soon will be unhappily surprised in a couple of years.

MaineCare, this state’s version of Medicaid, serves 300,000 people here. (For those who wonder what single-payer, publicly financed health insurance would look like, it has a model in Medicaid for good and, sorry, for ill.) MaineCare is vitally important to the well-being of nearly a quarter of the state, yet its costs have not been adequately accounted for, it does not pay doctors, nursing homes or hospitals enough and it will receive less money from the federal government in the future.

Of immediate concern for all states is what happens in Washington as the administration deals with a budget deficit brought on by the war in Iraq and the series of tax cuts that have reduced revenues to the federal government. President Bush’s budget will be submitted to Congress early next month and is expected to contain significant cuts to entitlement programs. Given the Medicaid spending has risen by 63 percent over the last five years, restraints on the program’s purse are very likely.

Maine relies on $2 of federal funding for every $1 it pays into Medicaid, but because incomes in Maine have slowly risen toward the national average, its Medicaid payments will not be as generous in the future, resulting in an additional shortfall of $75 million to $80 million. Add these problems to the expansion of the system in Maine and Dirigo Health’s reliance on it as part of its funding, and the Legislature should be alarmed.

Maine, naturally, has appealed to its members of Congress to find the state relief, but as the former member of Congress currently in the Blaine House knows, this won’t be easy. Massachusetts last week struck a deal with the Department of Health and Human Services to avoid the immediate loss of $583 million, hoping that by changing the way it administers its Medicaid program, its loss would be only about $200 million. Maine might be able to find a similar delay in its funding reduction, but it would likely be temporary.

Before the Legislature revisits its recent history and has wheelchair-bound residents and sufferers of head injuries demanding that lawmakers stop the hasty cutting of their essential benefits, it should begin thinking about the coming constraints and what they will mean to Maine. The sooner lawmakers begin, the better prepared Maine will be.