Reform Maine Medicaid

Maine Medicaid is an expansive program facing explosive growth in operating costs. Further compounding Maine’s Medicaid woes is a state economy, which provides the tax revenue to fund Medicaid, that is growing a slower rate than the rest of the nation. Yet even with Maine Medicaid’s challenges becoming more apparent, politicians in Augusta have ignored the problems rather than setting a policy course to protect the ailing program. Ignoring the facts about the state’s health care safety net won’t make the problems disappear, and could, ultimately, jeopardize Medicaid patients’ access to care.

Consider this.

Maine Medicaid is the largest Medicaid program in the country. In 1999, at the end of the last decade, the portion of Mainers under age 65 and on Medicaid was at the national average – about 10.5 percent of the population. Interestingly, the percent of Maine’s population under 65 and in poverty was almost identical at 10.7 percent. In just five short years through numerous expansions and eligibility levels for working adults at now more than twice the national average, Maine Medicaid ballooned to being the largest in the country – covering 22.2 percent of the under 65 population.

Yet, the percent of Mainers under 65 and in poverty increased only slightly. Since Gov. John Baldacci took office in January 2003, the number of people on Maine Medicaid has increased by more than 36,000 (15.5 percent) or more than the entire population of his hometown of Bangor.

State Medicaid spending is exploding. State Medicaid spending in the last three years has increased 59 percent or $320 million, and almost doubled since 2000. Maine’s Medicaid spending increases are double the national average, despite the fact that Maine has had very little increase in population. For the fiscal year 2006, state Medicaid spending was $863 million.

To put this spending in perspective, almost $0.95 cents of every dollar in net sales tax collected now goes to Medicaid. Despite these huge spending increases, Maine Medicaid is still not paying all its bills. To date, Maine Medicaid still owes hospitals almost $300 million in past due Medicaid bills.

Consider the outcry if a health insurer attempted to delay, for years, payments to hospitals for care provided to the insurer’s customers. Why is such behavior tolerated in Augusta as Medicaid business as usual?

Despite the Medicaid expansions, the number of Mainers uninsured has remained virtually unchanged. In 1999, when Maine’s Medicaid program was of average size, there were 136,000 uninsured Mainers under age 65. In 2004, there were 130,000 uninsured Mainers. Yet according to U.S. Census Bureau statistics, in those same five years, Maine Medicaid added 134,000 more working-age adults and children to its rolls. Maine added almost as many people to Medicaid as the number who were uninsured, yet the number still uninsured remained the same. Surely, a prudent person would conclude that Maine’s Medicaid expansions, all

enacted with the promise of covering the uninsured, have been a failure.

Maine’s economic climate is very poor. From January 2003 to the spring 2006, private-sector job growth in Maine is up 0.8 percent. Nationally, private sector jobs are growing five times faster. The only area that Maine is exceeding the national average is in the growth of government jobs. Government jobs in Maine grew

1.7 percent in this same period, compared to just 1.2 percent nationally.

It is important to remember that Mainers working and paying taxes finance Maine’s Medicaid program. If Maine policymakers are going to allow for explosive Medicaid growth, they had better be cognizant of the fact that there is a need for equally explosive economic growth.

What must be done to reform Maine Medicaid in order to make it more affordable? Maine should start by trying for a Medicaid program that is in line with the rest of the nation. Eligibility levels, or how much a person can earn and still be on Medicaid, must

be aligned with the national average.

Maine Medicaid provides a critical health care safety net. However, for this safety net to be available into the future it must also be reasonable and affordable to the compassionate, but strapped, Maine taxpayer. During this upcoming campaign season, ask future policymakers what their plan is to make Maine Medicaid more affordable and effective.

Tarren Bragdon is the director of Health Reform Initiatives for the Maine

Heritage Policy Center. He authors periodic reports on Maine Medicaid, available at MainePolicy.org, and can be reached at tbragdon@mainepolicy.org.