Internal Memo: The Truth About Welfare Expansion & Maine Hospital Debt Payment
Please read and share the following internal memo sent to the press discussing the Democrats plan to attach welfare expansion to paying Maine's hospital bills.
Consider the following information for your stories on tonight’s debate and vote on the Democrats’ mega-bill to cram welfare expansion and hospital payment together and ram them through the legislature. We have both procedural and substantive concerns with this “cram and ram” policy.
I just got some recent numbers from DHHS, which you can confirm with the department’s legislative liaison. The Department says Medicaid expansion as proposed tonight will cost Maine taxpayers—the General Fund—$75 million per year at the 90% match rate. The total cost over the seven years following the “free period” would be roughly $400 million. That assumes the enrollment estimates are correct… which would be a first. Last time, we saw over twice as many people enroll as we expected. That also assumes that the ACA’s individual mandate won’t drive even more able-bodied, childless adults onto MaineCare.
We’re facing a perfect storm of budgetary hemorrhage with Medicaid expansion as proposed.
That’s why we must pass Rep. Fredette’s minority report and study the issue further because the deal before us is a bad deal for Maine. In the meantime, we must make good on our promise to pay Maine’s welfare debt to its hospitals and get Mainers back to work.
Democrats and Republicans authorized the VLA Committee to create a committee bill to pay off Maine’s hospital debt. Nowhere in the authorization was Medicaid expansion included or mentioned.
Democrats and Republicans were in agreement as of three weeks ago that the hospital debt should be paid off and that a liquor revenue bond is the way to do it. Democrats are not “horse-trading” with Republicans, they’re poised to sacrifice a bipartisan jobs bill that they support in order to coerce Republicans into supporting welfare expansion. This is not a case of each party giving a little.
Without any notice to Republicans leadership or committee Republicans, Democrats in the HHS Committee forced a vote on a letter to VLA before HHS even had a chance to read it. The letter told VLA to merge the Medicaid expansion bill with the hospital payment bill.
From the Sun Journal: “Hamper said his committee was delivered the proposed amendment and not even given time to read it before a vote was called. "We were told, 'Let's adopt it and then we can discuss it,' Washington-styled politics," Hamper said.”
VLA members were forced to incorporate a piece of legislation that is outside their jurisdiction and with only 24 hours to consider such a massively complex topic as Medicaid expansion. It was clear from debate in VLA that Democrats—and indeed Republicans—on that committee were not prepared to make an informed decision on Medicaid expansion.
After tonight, Democrats may be able to say that they passed Medicaid expansion…
But they’ll never be able to say they enacted it
They’ll never be able to say it was done in the light of day
They’ll never be able to pretend that their actions were in good faith
Practiced Washington-style, Pelosi politics in forcing a hugely complex and controversial bill through the committee process;
Showed complete disregard for the views of the minority party and the Governor in unilaterally forcing through a bill they knew lacked the support to pass;
Made good policymaking take a backseat to the liberal ideological agenda of Democratic leadership;
Scuttled the one major piece of bipartisan legislation that would put Mainers to work now;
Created severe backlash and uncertainty among some of the state’s largest employers, including hospitals and building contractors who now have their hopes dashed of seeing $700 million pour into the Maine economy.
Medicaid expansion is not “free”
DHHS estimates that expansion as envisioned by this bill will cost the General Fund:
- $70 million in FY 16-17
- $102 million in FY 18-19; and
- $150 million in FY 20-21 and $75 million each year thereafter at 90% matching.
That’s $400 million in Maine taxpayers’ money in the seven years after the “free” three year period.
These numbers assume that the enrollment estimates will prove to be accurate. We all know how that goes. Last time, over twice as many childless adults as expected enrolled… many of them simply switching from private insurance to Medicaid. And with coverage now being mandatory under the ACA, people have an even greater incentive to enroll, furthering the potential for enrollment estimates being left in the dust.
Even within the three years of 100% matching, the state will have to hire 93 new bureaucrats at a cost of $7 million per biennium.
The federal government can reduce the matching rate at any time. One Congress cannot bind another.
The mandatory components of Obamacare require $10 million in additional state spending in the current budget, with or without expansion.
Maine’s current Medicaid program is exceptionally generous compared to other states’ and has grown rapidly in recent years
MaineCare spending as a percentage of state General Fund spending has doubled over the past 15 years, increasing from 13% to over 25%, crowding out funding for schools, roads, law enforcement, and other critical government services.
From 2002 to 2012, MaineCare enrollment increased from 200,000 to 338,000. Compare to New Hampshire at 160,000.
Maine already has the 3rd highest Medicaid enrollment in the nation, at 27% of our population. The New England average is 18% and the US average is 19%. Maine already puts half again more people on Medicaid than the average state or even its neighbors.
This expansion would mean that about 1/3 of Mainers are dependent on the government for health care.
Our other welfare consumption is staggering: 3rd for TANF, 2nd for food stamps, and 2nd in the nation for welfare spending as a percentage of overall state spending. Democrats have turned Maine into a welfare state; it is time to reverse the trend, not double-down on dependency.
Some may say that our Medicaid enrollment/spending is high because we’re an old state demographically, but we actually have a higher rank for Medicaid enrollment among those younger than 65—we rank 2nd in the nation for Medicaid enrollment of non-seniors.
Maine’s 2001 expansion of coverage to non-disabled childless adults up to 100% of poverty level was a costly disaster:
Democrats predicted that 11,000 childless adults would enroll, but the estimates were smashed when 17,000 enrolled within 14 months and the state eventually capped enrollment when the figure reached 25,000 after only two years. Consider that when the Democrats “estimate” that 70,000 will enroll under expansion. This is why they call MaineCare a “black hole” for money.
Proponents of the last expansion said that it would reduce the number of uninsured, but from 2001 to 2011, the number of uninsured Mainers stayed roughly the same, dropping slightly from 136,000 to 133,000.
Thousands simply dropped their private insurance and enrolled in MaineCare.
Who are the MaineCare childless adults? About 60% are males, 75% are single, 60% are under 45 years old, all are under 65, and all are able-bodied (non-disabled).
MaineCare expansion has created competing priorities to its core mission.
· While we consider putting 70,000 more able-bodied, young, single males on medical welfare, 3,100 disabled and elderly Mainers remain on the waitlist for services. Medicaid was created for them, not for able-bodied single males.
Democrats say that expansion will reduce charity care, or uncompensated care at hospitals.
But according to Maine DHHS, charity care has increased from $67 million in 2001 to $196 million in 2011, despite repeated expansions in Medicaid enrollment. Charity care increased more than six-fold from 1996 to 2001, from $30.5 million to $196 million.
Democrats say that expansion will reduce expensive ER care, but studies show that Medicaid recipients use the ER just as often as those who are uninsured. Coverage does not change behavior.
Harvard/MIT Study: “Medicaid coverage . . . does not seem to have an effect on use of emergency departments.”
CDC National Center for Health Statistics: “Medicaid beneficiaries were more likely to have had at least one ER visit in a 12-month period than persons with private insurance and the uninsured.”
The Muskie School at USM: Analysis of Emergency Department Use in Maine (Page 2): “There was no discernible pattern associating high or low ER use with . . . insurance status.”
The Federal Government’s promises of matching funds should not be relied upon.
Federal matching rates (FMAP) have been reduced from 75% to 57% over the years.
FMAP will be reduced by another 1% on October 1.
There are no promises about what will happen after 10 years of Medicaid expansion. The 90% match does not go on forever.
Heritage and Kaiser Studies
They are one in the same. The Heritage Foundation simply recycled Kaiser’s numbers.
When predicting savings, Heritage itself said that the savings are “highly speculative” because they assume that charity care will be reduced.
Heritage even pointed directly at Maine, saying that our experience with expansion shows that charity care is not reduced as a result.
The underlying Kaiser study is flawed in that it does not use state-specific data (Kaiser admits this flaw in its study).
What should we rely upon, a flawed nationwide study, or our own DHHS, which says expansion will cost Maine taxpayers—the General Fund—$70 million in FY 16-17 and $102 million in FY 18-19?
There are still unanswered questions
DHHS must still complete an audit, which will take another month, before we even have confirmation that we will receive 100% for the first three years. Federal HHS Commissioner Sebelius has said 100% is “likely,” not certain.
The Governor has not completed negotiations with the federal government. He could get a better deal, and that’s worth a chance at savings Maine taxpayers tens or even hundreds of millions of dollars.
There are alternatives for the population being considered
All of Maine’s 39 hospitals provide free care to those below 150% of the federal poverty level; 24 of them provide free care below 200%.
The Obamacare exchange will provide subsidized private health insurance to those making 100-400% of the federal poverty level. Click here for a calculator that determines the out-of-pocket amount. For example, a 30 year old adult at 120% of federal poverty level would pay only $5 per weekly paycheck for a “Silver” plan, and nothing for a “Bronze” (catastrophic) plan.
Arkansas is implementing an expansion model that relies on the federally-subsidized insurance exchanges instead of a massive expansion of their state Medicaid program. This is an option worth considering.
Tennessee and Indiana have proposed alternatives to the feds that expand coverage using state insurance programs other than Medicaid.
Utah has commissioned a study group similar to that proposed in Rep. Fredette’s floor amendment to study the cost of expansion as proposed by the feds and alternatives to the feds’ proposal.
Because we have unanswered questions and alternatives worth exploring, the House should pass the Minority report to free the hospital payment bill from the Medicaid expansion bill, and consider the amendment to create a study group to explore the issue of expansion further.
