The LePage Case against Medicaid Expansion: A House of Cards Built on Fallacies, Contradictions, and Ideology

April 18, 2014 by

 “We cannot go grab federal money without understanding just how much Maine taxpayers will wind up paying. Furthermore, it is incredibly irresponsible to put taxpayers on the hook when federal health care subsidies are available that would provide virtually free health care for low-income Mainers.”

– Governor LePage, Press Statement, April 17, 2014

Last night Maine lawmakers passed an amended proposal to accept federal funds and provide health coverage to almost 70,000 Mainers. This proposal was modeled on the “private option” Medicaid model designed by New Hampshire Republicans and passed by a bipartisan majority in our neighbor to the west. Predictably, Governor LePage issued the statement above opposing any effort to draw down federal funds.

The Coverage Gap

Aside from the apparent contradiction ―federal subsidies are fine, but accepting federal funds set aside for Maine is not ― Governor LePage has once again made claims that are just not true. While some low-income Mainers can get low-cost health coverage using the subsidies the governor talks about, the 32,000 Mainers living below the poverty line are not eligible for the subsidies, and will remain uninsured if we don’t accept federal funds. They’ll be left to fend for themselves relying on free care where they can get it, showing up in hospital emergency rooms while forgoing preventive care and chronic disease management, and likely facing personal bankruptcy if they have a catastrophic health issue. The Governor and his allies in the legislature remain unable or unwilling to acknowledge this reality. The worst example of this came earlier this year when Senate minority leader Mike Thibodeau suggested that people fudge their income in order to qualify for federal subsidies― a notion that the Portland Press Herald’s Bill Nemitz dismisses as ludicrous and says “is politics at its absolute worst.”

Initially, Governor LePage cited Maine Department of Health and Human Services projections that put the cost of expansion at $70 million by fiscal year 2017. When he could no long defend the accuracy of those figures, the governor awarded a no-bid contract to the Alexander Group which produced cost estimates that have been similarly discredited. The governor doesn’t seem to care what the real figure is so long as there is additional cost involved.

In truth, during the first three years of Medicaid expansion, Maine will actually make money.

Here’s why.

The $256,000,000 in new federal funds that would flow into the state annually would generate significant economic activity, almost half a billion each year by MECEP’s calculations. That additional economic activity will generate considerable new state revenue, as much as $23 million a year―more than enough to cover any additional costs to the state associated with accepting federal funds. By the way, MECEP analysis has also shown that accepting federal funds to expand Medicaid will support 4,400 jobs across the state and add $500,000,000 annually to our economy. By not accepting federal funds, the state is losing more than $900,000 every day―nearly $100,000,000 since January 1, 2014

In addition, Maine would save money that it currently spends to provide services in other parts of the budget. A fiscal note that the nonpartisan Office of Fiscal and Program Review developed for a previous Medicaid expansion proposal confirms this. All told, Maine taxpayers will come out ahead by drawing down federal funds while the federal government provides 100 percent matching funds for newly eligible program participants. After that, there are credible projections that show Maine saving over $600 million over the next ten years.

This brings us back to the “draw down” versus “subsidy” argument. In either case, the funds come from taxpayers and the federal government. Meanwhile, states that do draw down federal funds will reap tremendous financial and economic benefits. While encouraging people to take advantage of federal subsidies in the marketplace will recoup some of these lost funds, even under the best case scenario, it offsets less than half of the money that Maine is missing out on. Ultimately it puts a lie to the idea that we couldn’t possibly accept federal funds because it will place too great a burden on future generations.

The real culprit is out of control health care costs. Accepting federal funds ― whether as part of Medicaid expansion or in the form of subsidies on the federal health insurance marketplace ― provides an opportunity to provide people more cost-effective care. Hiding behind erroneous cost projections and ideology-driven assumptions about why we should not take advantage of this unprecedented opportunity to improve Maine’s economy and health outcomes for tens of thousands of people is inexcusable.

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