November 30, 2012

$100 million MaineCare shortfall a product of missteps, bad estimates, commissioner tells legislators

By Steve Mistler
Staff Writer

Overly optimistic savings initiatives, budgeting based on still-unapproved cuts and a failure to forecast health care claims all are contributing to a projected $100 million shortfall in the state's Medicaid program.

click image to enlarge

Mary Mayhew

Staff file photo by Joe Phelan

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Roger Katz

Staff file photo by Joe Phelan

However, there are still many unanswered questions left to explain a budget gap that has been ballooning by an estimated $2.5 million each week since the current fiscal year began July 1.

Shortfalls are not uncommon in MaineCare, the state's Medicaid program; but the magnitude and timing of the latest one stunned and perplexed lawmakers on the Legislature's budget-writing committee, which learned of it Thursday, six days before the swearing in of the new Democratic majority.

Lawmakers didn't ask a single question when Department of Health Human Services Commissioner Mary Mayhew delivered the news. The queries began in earnest after the meeting and are likely to continue until and after Mayhew presents a more detailed analysis of the shortfall sometime in December.

Frustration is mounting about state management of the program and yet another shortfall that equals about $77 for every Maine resident. Worsening the scenario are other budget issues that include a $35 million revenue gap in the current budget and a projected $880 million gap in the next two-year spending plan.

The Medicaid problem further complicates the state's budget picture.

"Solving this has to be one of the top priorities of the next legislative session," said Sen. Roger Katz, R-Augusta. "Providing health care to our most vulnerable residents is important, but all of these cost overruns at DHHS are crowding out other state spending priorities."

The $2.1 billion DHHS budget is 45 percent of the state's overall budget. The projected Medicaid shortfall represents less than 5 percent of the agency's budget.

Mayhew will be the recipient of the most pointed questions.

She is not the first DHHS commissioner to oversee sizeable shortfalls, but she has been criticized previously for presenting lawmakers with an approximately $121 million budget gap last year and this year revealing that a computer glitch granted 19,000 ineligible Mainers access to Medicaid benefits.

Mayhew reiterated Friday that the Medicaid shortfall represents the state's ongoing battle with the program.

"The fact is that ... not only is this problem not unique to this administration, it's not unique to this state," said Mayhew, adding that the state's Medicaid program has grown $1 billion over the last 10 years.

While many states are dealing with Medicaid funding issues, some states are faring better than others.

According to a June survey by the National Association of Budget Officers and the National Governors Association, Medicaid budgets for current fiscal year assumed a growth rate of 3 percent over fiscal 2012. That compared to an 11 percent increase in 2011 and average annual spending growth of 7 percent from 2007 to 2010.

Mayhew blames much of the current shortfall on the federal government.

About $20 million of the current Maine shortfall is the result of cuts that were passed by the outgoing Legislature but that still are awaiting federal approval. There were early warnings that some of the reductions -- about $10 million -- wouldn't receive federal waivers, but Republican lawmakers, at the urging of the LePage administration, still booked the savings in a party-line budget vote this past spring.

The federal government has yet to grant permission for the Medicaid reductions.

Mayhew said Friday that it wasn't a gamble to book the savings without federal approval.

"Our request to the federal government was to live within the means of our budget resources," she said. "We brought our challenges to the federal government. We are limited with what we can do. ... This is an entitlement program. It's not a capped budget."

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