March 20, 2013

LePage seeks more federal funds for Medicaid

Maine says it will take part in wider eligibility if the Obama administration picks up the costs for 10 years.

By Steve Mistler
State House Bureau

AUGUSTA — Gov. Paul LePage is telling the Obama administration that Maine will consider participating in the Affordable Care Act's Medicaid expansion if the federal government pays for affected recipients of the government-funded health insurance for 10 years.

The proposal, outlined in a letter Monday to U.S. Health and Human Services Secretary Kathleen Sebelius, is effectively LePage's counter-proposal to the federal government, which hopes states will join the expansion effort under the health care law.

LePage indicated last week that he is willing to consider Medicaid expansion, a departure from his previously stated opposition to the program.

In the letter to Sebelius, Maine Health and Human Services Commissioner Mary Mayhew wrote that the state has been penalized for voluntarily expanding Medicaid eligibility in 2003. She said that because federal reimbursement rates for some Medicaid recipients have since decreased, other states are getting a better deal for participating in the expansion than Maine would.

Medicaid expansion will be fully funded by the federal government from 2014 through 2016. Federal funding will cover 90 percent of the program after that, although skeptics note that the post-2016 reimbursement could decrease.

The state is projected to spend $776 million on MaineCare, its version of Medicaid, in the fiscal year ending June 30. That's 25 percent of its overall budget. Counting federal money, nearly $2.4 billion will be spent on MaineCare this year.

The Medicaid expansion would make 55,000 more low-income people eligible for MaineCare, according to an analysis by the Kaiser Family Health Foundation.

Those people would be "able-bodied" parents, and adults who have no children and earn as much as 133 percent of the federal poverty level -- just over $20,500 a year for a two-person household.

Mayhew said Maine has already expanded eligibility to cover some of that population, but the federal government has reduced the reimbursement rate, contributing to Maine's frequent budget problems.

"While some argue the state cannot afford to turn down the expansion of Medicaid, the simple truth is that by accepting a lower rate of federal funding than other states are being offered, Maine would continue down an unsustainable and unaffordable path," Mayhew wrote. "For the expansion of Medicaid to be a viable option to consider, we would need for this penalty to be lifted, creating parity between Maine and the non-expansion states with regards to the federal match rate."

She said that if the federal government funds 100 percent of the state's Medicaid costs for Mainers covered by the expansion for 10 years, "we can put our Medicaid program on a track to succeed in the long term."

Democratic leaders had a tepid response to the proposal. Senate President Justin Alfond, D-Portland, and House Speaker Mark Eves, D-North Berwick, said full reimbursement for 10 years is unrealistic.

But both said they are glad that the governor is discussing expansion with the Obama administration.

"It's encouraging that the governor is looking at accepting federal funds," Alfond said. "Doing this is good for the state's economy, it's morally the right thing to do and it's good for our health care system."

Alfond said 100 percent reimbursement "seems to be an unrealistic request. No other state in the country has gotten a deal like this. I hope this has not created a false starting point."

Mayhew said the state would also need greater flexibility to manage its Medicaid program, which she said needs an overhaul.

(Continued on page 2)

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