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Everything You Need to Know About Medicaid Expansion in Maine ON THE STATE’S COST OF EXPANSION

Medicaid expansion is not “free”

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An comprehensive, independent analysis by Medicaid experts at the Alexander Group found that expansion would result in: - $807 million net cost to the state over 10 years - $125 million per year in annual costs by 2023 - Medicaid’s share of the state budget increasing from 25 to 39 percent - Almost two in five Mainers relying on a broken Medicaid system for their coverage Prior to the Alexander Group’s report, DHHS, which is responsible for estimating future MaineCare spending and crafting a budget, estimated that expansion will cost the General Fund: - $70 million in FY 16-17 - $102 million in FY 18-19; and - $150 million in FY 20-21. 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. The legislature’s nonpartisan budget office (OFPR) also estimates millions in annual costs. Although they only look three years ahead, when you add the cost of parents and extrapolate their estimates to the cost at the long-term 90 percent federal match, you get a $40 million per year cost. Democrats may tout studies by liberal think tanks estimating net savings, but it’s our own DHHS and OFPR that write the budget, not the Kaiser Foundation, and they’re telling us the costs will be extraordinary. 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, or $10.5 million over the “free” period. Even within the three years of 100% matching, the state will have to expand back to parents at 100-138% FPL, a population slated to be dropped on Jan. 1, 2014, and they will not be covered at a 100% match. The feds confirmed in the latest letter from CMS that they’ll be covered at the current 62%. The upcoming biennial budget accounts for funding them, as required by the feds, transitionally, but this does not cover them for the entire three years. We will have to pay $18 million out of the state’s General Fund per year to cover them—money we would not have spent in those three years were it not for expansion. This is the question the Democrats MUST answer: Where do you plan to get the $75 million per year in long-term costs to the state taxpayers? You must either raise taxes or cut spending elsewhere. MaineCare has already cannibalized the budget for years, leaving little to cut outside of DHHS and education, which together consume over 80% of the budget. The Dems must either raise taxes or cut education to pay for more welfare.

Maine’s current Medicaid program is exceptionally generous compared to other states’ and has grown rapidly in recent years

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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:

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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.

MaineCare expansion has created competing priorities to its core mission.
 While we consider putting 70,000 more able-bodied, disproportionately 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.
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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.” And most recently… Harvard University found that ER usage among Medicaid recipients was actually 40 percent greater than among the uninsured after Medicaid expansion in Oregon.

Heritage and Kaiser Studies
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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—$75 million per year?

    About half (35,000) of the 70,000 people who would be eligible for expanded Medicaid are already eligible for heavily subsidized private plans on the ObamaCare exchange. These plans would cost only $4-10 per week. Private plans on the exchange mean better access and quality of care, and thus better health outcomes, for the insured. Private plans also mean better reimbursement rates to hospitals and other providers.

Democratic surrogates used Veterans’ Day as an opportunity to push Medicaid expansion, with op-eds in the BDN and Press Herald claiming that we should expand Medicaid because 2,700 Maine veterans can’t use the VA. This is a big part of the Democrats’ message overall on expansion. Their source? The highly liberal Urban Institute, which was created out of Lyndon Johnson’s “Great Society” welfare initiative and saw 100 percent of its 2003-2010 employee political donations go to Democrats. Not a single one to a single Republican. Lost from Democrats’ sound bites is the fact that The Urban Institute itself did not say these 2,700 veterans are ineligible for services, but that many do not live close to VA facilities and priority is given based on different factors, including income. That is a travesty and the Veterans’ Administration should do something about it. Veterans should not go without health care. This is a problem that can and should be solved outside the Medicaid expansion debate. But to insert veterans into this debate as a political football is completely inappropriate. The Democrats’ message is designed to create the impression that Medicaid expansion would somehow disproportionately benefit veterans. But take a look at the numbers: According to the US Census Bureau, veterans make up 10 percent of Maine’s population. According to The Urban Institute’s and Democrats’ own numbers, veterans make up 3.9 percent of those who would be covered by Medicaid expansion. Furthermore, according to the Veterans’ Administration, male veterans earn $51,608 to non-veterans’ $46,322, and 43.6 percent of them live over 400 percent of the federal poverty level, compared to 36.8 percent of non-veterans. The numbers are similar for female veterans. Veterans pay more than their share in taxes already. So, if anything, veterans are actually a group that is likely to bear a disproportionate cost of expansion in the form of the state tax hikes or reduced services that will be required to pay its $75 million/year price tag, rather than a disproportionate share of its benefits. Democrats are asking our nation’s veterans to bear a disproportionate share of the burden in paying for welfare expansion. That’s wrong. Finally, Democrats could have shown their support for veterans by approving Rep. Corey Wilson’s bill to sell abandoned state buildings to be used as shelters for homeless veterans, but no, wine tasting was more of a priority.

When states choose not to expand Medicaid, the money will not go to other states’ Medicaid programs or even to other state programs. It will simply be retained by the US Treasury, going right to the feds’ bottom line. Now, this money would likely be appropriated somehow, between defense, education, maybe back into health care, whatever… but it does not stay within the ACA; it does not go to benefit other states within the ACA. In fact, the CBO estimated that the federal government will save $84 billion because of states that choose not to expand. Here’s some further reading from a memo I sent to reporters two weeks ago: From health policy expert Joel Allumbaugh of MHPC: “Expansion states will not receive additional expansion dollars because other states opt out, rather the total cost of the ACA will decrease. According to a 2012 Congressional Budget Office projection, states refusing to expand Medicaid in 2014 will reduce the federal deficit by $84 billion. Rejecting the Medicaid expansion keeps money in the pockets of Maine taxpayers who also pay federal taxes.”

Here’s some more info on Medicaid expansion sunset clauses. This Wall Street Journal editorial describes “New Medicaid” (post-ACA Medicaid) as a “roach motel” that states may enter but may never leave. As it argues, the Supreme Court prohibited Congress from saying to the states, “expand, or else,” but there’s nothing stopping them from saying, “stay expanded, or else” (see “maintenance of effort”). A sunset clause imposed by state statute is no barrier to federal law, regulation, or coercion. With the third-largest Medicaid program in the country and a below-average median household GDP, we must consider whether it is wise to enter this “roach motel.”

New Medicaid's Roach Motel
The GOP flippers can check in, but it's unlikely they can check out.
Wall Street Journal, March 16, 2013 From the article: “But there's no evidence in the original law or the Supreme Court opinion that states can join or leave at their own whim. The logic of Justice Roberts's opinion suggests that once states adopt new Medicaid, the program immediately becomes the old program for the purposes of the law and then states can't leave. The Bricker memo also cites ‘guidance’ from the federal Health and Human Services Department that states ‘may decide later to drop the coverage.’ But these informal documents on the HHS website lack the force of law or even of regulation; they aren't part of the Federal Register. In any case, HHS doesn't have such authority. Congress didn't grant the Administration any more statutory leeway than it did the states.”