You are on page 1of 2

Members of the press, On WVOM’s George Hale & Ric Tyler Show recently, Speaker Eves tried to explain how

adding 70,000 people to the welfare rolls will somehow be free or even save us money. Listen at 2:30-4:00 in . . . First, the Speaker cites Kaiser Foundation numbers saying that Maine will save $690 million over 10 years… numbers that the Heritage Foundation has blown a hole in, saying they’re built on lots of assumptions and Maine is a reason why those assumptions may not work out. He then cites the fiscal note assigned to the welfare expansion bill by the legislature’s nonpartisan budget office, the Office of Fiscal and Program Review (OFPR)—a cost estimate that stands completely at odds with Kaiser’s estimation. Democrats have been leaning on the fiscal note lately to fuel their wildly irresponsible and unqualified claims that Medicaid will “save more money than it costs.” Upon further inspection, the fiscal note says Maine will save just $7.6 million from the General Fund over the first two years (FY 15-16), before going in the red by $5.226 million for the second half of FY 17, when the match rate drops to 95%. This equals about $10.5 million per year at a 95% federal match (the 97.5% match rate you see on the note indicates a half-year at 95%). Also worth noting is the fact that over 20,000 people are scheduled to be dropped from the medical welfare rolls starting Jan. 1. Participation in expansion would require Maine to keep them on the rolls at a cost of about $18 million per year and growing (granted, two years of “transitional funding” for this population has already been budgeted). However, OFPR, in its latest fiscal note—the one the Dems are touting—is not counting this additional cost as a cost of expansion since that population is currently covered. But if we expand, we will have to pay $18 million/year for this population; if we don’t expand, that cost goes away. Democrats can’t have their cake and eat it too—they can’t decry 20,000 being dropped from welfare as a reason to expand and at the same time cite cost estimates for expansion that don’t include the extra cost of covering them. Now, I spoke with Chris Nolan at OFPR, who wrote the fiscal note, and he says that they may be doing further cost estimates for years past FY 17 but they don’t have any estimates as of now. However, some very rudimentary extrapolation of the latest FY 17 cost estimate says that the long-term costs of Medicaid expansion pull overwhelming in the direction of DHHS’s estimate of $75 million/year, as opposed to the Democrats’ estimate of “free.” Here’s how it goes with the OFPR fiscal note: 1. $10.5 million per year cost to the state for new populations at a 95% match rate 2. Multiply that x 2 (representing a 90% match rate) = $21 million for new populations by 2020, when the match hits 90% 3. Add $18 million for populations we must re-expand to that would otherwise be dropped on Jan. 1… 4. …and you get a $39 million per year cost of expansion when we hit 90% federal matching in 2020… 5. Furthermore, Chris says that the factors that lead to savings in the first two-three years gradually go down (you see this in the General Fund net cost projections actually reducing from

$3,835,565 in FY 14-15 to $3,778,658 in FY 15-16). This, combined with annual hikes in the overall cost of coverage shown in the second table in the fiscal note, send the state share soaring each year. 6. Also, according to DHHS, their $75 million figure expects a higher number of new enrollees than OFPR’s estimate. Remember, in 2001’s expansion, Democrats told us we’d have 11,500 sign up… two years later we had 25,000. Add to that the individual mandate coming into effect. Put simply: Don’t let Democrats get away with saying expansion will save money without specifying timelines. Ask them how much the added populations will cost in 2017, or 2020… or even 2030. Republicans take the long view. DHHS and OFPR estimates both indicate that Medicaid expansion will cost Maine taxpayers tens of millions of dollars per year once it matures past the “free” period. The Speaker adds: “And these are not squishy numbers; these are very solid, real numbers.” Best, David __________ David E. Sorensen Communications Director Maine House Republicans Cell: 207.205.7793