Policy Wonk: Maine’s health care policy is costly

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The cost of Maine’s health care policy is mounting as we speak.

For example, decisions made early in the LePage administration to shrink the state’s Medicaid program by narrowing eligibility requirements have (from 2012 to 2013) increased the number of individuals without health insurance by 12,000. U.S. Census Bureau data indicates that during this period Maine was one of only two states in the nation to see the number of people without health insurance increase.

Maine saved a few dollars, but it also lost nearly $2 of federal Medicaid matching funds for every dollar saved; 12,000 people (mostly low-income elderly, working parents, and young adults) lost the benefit of preventative health-care services, and care for chronic diseases, which insurance coverage provided.

Faced with health emergencies these now-uninsured individuals are forced to utilize high-cost emergency room services. In sum, aside from the meanness of the policy, in the long run it will clearly drive up health-care costs.

Another policy decision that has dramatically increased Maine health care (and other nonprofit institutional) costs stems from the governor’s irrational aversion to bonding.

In the name of fiscal restraint he (and former state Treasurer Bruce Poliquin) blocked the Maine Health and Higher Educational Facilities Authority from issuing capital construction bonds to meet the needs of Maine’s 38 hospitals (and similar needs of the University System and other nonprofit organizations).

In 42 years of the authority’s existence, no governor (or state treasurer) has taken this step. There has never been a bond default. The authority has ample reserve funds. The bond pooling arrangements the authority uses allows capital construction funds to be made available at much lower interest rates than if each of the eligible institutions went into the bond market on their own. The savings amount to millions of dollars annually.

Instead of saving dollars by lowering essential health-care capital construction costs, the governor’s inexplicable behavior has increased these health-care costs dramatically.

Even a positive health-care policy decision, like paying off Maine’s $184 million accrued hospital debt – a step which Republicans and Democrats agreed should be taken, and which would release to the hospitals nearly $300 million in Federal matching funds – was not taken advantage of fully.

The Center for Public Interest Reporting recently pointed out that: “In exchange for paying the hospital debt, (the Department of Health and Human Services) could have struck a deal with the hospitals to share risk in managing Medicaid.” Risk sharing and hospital Medicaid cost control are needed and long overdue.

Paying off the debt, putting nearly $500 million dollars in the hands of Maine’s hospitals, was the right thing to do. But the governor’s office, DHHS, and the Legislature were naive not to recognize that taking this step created a lot of leverage to put meaningful cost controls in place. But that didn’t happen, and we missed an opportunity to significantly reduce Medicaid-related hospital health-care costs.

Finally, the most costly health care policy decision is the governor’s/Republicans’ refusal to allow Maine to participate in the Affordable Care Act. This decision has already deprived the state of $340 million in federal money in each of the last two years, and (unless reversed) will cost the state $340 million in the next fiscal year, and 90 percent of this amount every year thereafter.

The record is clear:these monies would have extended health-care coverage to some 70,000 Mainers. They in turn would have utilized the services of individual physicians, Maine’s 38 regional hospitals, and the growing range of physician/hospital health-care support services, facilities and personnel.

The Center for Economic Policy estimated that ACA-related health-care job growth in Maine would exceed 4,000. This job growth would extend to every corner of the state. At the same time, the quality of life, the health of 70,000 Maine people, would have been vastly improved.

But this didn’t happen. In a surfeit of ideologically driven political correctness, we have turned down $680 million. This money, the jobs, the multiplier effect on Maine’s overall economy of an investment of this magnitude is lost and cannot be recovered. And obviously, the benefit of improved health for tens of thousands of Maine people has also been irretrievably lost.

More importantly, these employment, economic, and social benefits will continue to be lost in future years if we continue to turn our back on the ACA and the millions of federal dollars it would funnel into Maine annually. It’s the single greatest health care and economic policy blunder ever made by Maine government.

In short, the LePage administration’s health care policy decisions have proved to be very costly; a series of lost opportunities. We can and must do better.

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Orlando Delogu of Portland is emeritus professor of law at the University of Maine School of Law and a longtime public policy consultant to federal, state, and local government agencies and officials. He can be reached at orlando.delogu@maine.edu.

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