The Truth About MaineCare Expansion

It is February of 2015 and Maine hospitals are taking stock of 2014, the first calendar year under the Affordable Care Act’s individual mandate.  The ACA was supposed to reduce charity care by requiring everyone to have insurance and by providing subsidies for insurance.  However, Maine hospitals are reporting that bad debt and charity care costs are actually skyrocketing, according to this report from MPBN Radio. Hospital administrators are focusing on the lack of Medicaid expansion as the cause of bad debt without even mentioning the debt caused by those who were individually mandated to buy insurance but did not do so.  It is important to note that in states that have not expanded Medicaid, persons eligible for Medicaid under federal rules have been exempt from the individual mandate.

The MPBN report mentions the unwillingness of Gov. LePage to expand the Maine Medicaid (MaineCare) program and it refers to the modest bipartisan cuts to MaineCare in 2013, but it does not mention the substantial MaineCare expansion over the last 10 years.  As a result of vigorous lobbying by the Maine Hospital Association and others, MaineCare was expanded significantly between 2003 and 2011.  During these same years, charity care at hospitals grew steadily while 25,000 childless adults were added to MaineCare rolls and bad debt at Maine hospitals grew from 40 million to 215 million dollars.

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In February of 2013, Mary Mayhew, the commissioner of the Maine Department of Health and Human Services, testified before a Florida State Senate Committee about the 2003-2011 MaineCare expansion.  The slides from that presentation are available in the pdf format from the Florida Senate website as part of a large file that covered the entire hearing.  Mayhew’s presentation begins on page 91.  The red line that plots charity care and thus bad debt is unperturbed by MaineCare expansion, represented by the blue line.  It is also interesting that the number of uninsured changed very little when MaineCare was given to 25,000 additional people.  In both 2003 and 2011 the uninsured rate for childless adults aged 19 to 64 was 29% while the overall uninsured rate remained at about 10%.

 An important lesson from Mayhew’s presentation is the challenge of estimating the number of people who will be newly eligible for benefits.  Prior to 2003 Maine estimated that it would have 14,800 potentially newly eligible MaineCare enrollees, yet when they made MaineCare available to these 14,800 people, 25,000 people actually enrolled.  Giving free stuff to eligible people makes people become eligible for free stuff.  Mayhew finished her presentation by pointing out that this group of childless adults aged 19 to 64 is disproportionately skewed toward 50-year-old men with health care costs that are more than 3 times higher than average even for MaineCare recipients.  That is not really surprising since this newly enrolled population is older and may be suffering the effects of long-term unhealthy habits.  For example, 43% of MaineCare recipients smoke compared to 18% of Mainers not on MaineCare.

 If giving 25,000 people medical coverage does not reduce the overall number of uninsured, then how much Medicaid expansion will it take to reduce the numbers of uninsured and to satisfy the hospitals by reducing bad debt?  The answer may come from nearby Vermont.  This state, with a population of 626,630 residents, added 87,492 people to Medicaid rolls since expansion started in 2013.  Having seen 14,800 suddenly turn into 25,000 in Maine, it will not be a surprise that Vermont only had 42,760 uninsured before it expanded Medicaid to 87,492 people.  It is likely that an expansion in Maine would be even more dramatic because Maine’s uninsured rate is higher than Vermont’s pre-expansion uninsured rate.  A similar expansion involving 13% of Maine’s population would add 173,000 people to MaineCare. That is more people than the combined populations of Portland, Lewiston, Auburn, and Bangor.  If the annual cost per beneficiary were similar to the average of $5,072 that was paid for each of the 25,000 patients mentioned above, this new group could bring $865 million to Maine’s doctors and hospitals each year. This is why hospital administrators are emphasizing the issue of MaineCare expansion.

 Gov. LePage and the legislature will be under increasing pressure from the hospitals to expand MaineCare, and we should not criticize the sitting politicians for listening to the needs of this important industry.  The hospitals are not in a position to reform healthcare on their own when their main customer is not the patient but rather CMS in Washington (Centers for Medicare and Medicaid Services).  They are doing what they can to get more revenue from CMS. 

 I predict that MaineCare expansion under ACA is coming, and it will likely involve proposals similar to those being made in Tennessee.  Tennessee’s Gov. Haslam is the president of the Republican Governors Association, but even he cannot ignore the pressure that his state’s hospitals are bringing to bear.  Gov. Haslam’s first attempt to pass the plan he designed has failed in the legislature but other attempts are likely.  Haslam’s own brand of expansion would have helped him save face by introducing token measures such as premiums and co pays that are supposedly meant to teach Medicaid recipients healthy choices and personal responsibility but will in practice blur the line between Medicaid and the subsidized and tightly regulated “private” insurance purchased on healthcare.gov (not .biz). The line will become so blurry that we won’t even be able to discern the exact moment the single payer system materializes.

 The truth about Medicaid expansion is that, for hospital administrators, ObamaCare is Medicaid expansion.  When you are busy keeping a hospital running, there is no time to worry about the individual mandate’s impact on fundamentals of liberty.  As is always the case, massive government spending and the pattern of electing those who promise and deliver massive transfers of wealth to selected groups (rich or poor, public or private; red or blue; Medicaid or NSA) instantly result in erosion of Liberty.

 As LPME strives to preserve liberty, we need to register 5,000 Mainers as Libertarians this year.  Let’s achieve this goal and work to elect Libertarians to office in Augusta and beyond!


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