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Governor’s Address: Medicaid Expansion Must Be Funded Responsibly

When I took office, MaineCare was running biennial budget deficits of more than $200 million, and our state owed the hospitals $750 million in Medicaid debt. I campaigned on paying the hospitals without raising taxes, and I did. It was one of our signature accomplishments.

My administration has worked hard to bring our state’s finances back from a sea of red ink and into the black. MaineCare is now on sustainable financial footing. It has not run a shortfall in years, and the hospitals have been repaid in full. This is a turnaround of nearly one billion dollars.

But our state continues to devote significant resources to healthcare and social services. DHHS funding accounts for 34 percent of General Fund spending, and MaineCare spending alone accounts for 23 percent of the General Fund. It has tripled as a percentage of the General Fund budget over 30 years.

Although our reforms have right-sized the MaineCare program, there are 85,000 more individuals in our state receiving Medicaid benefits today than there were in 2001. One-in-five Mainers is enrolled in MaineCare, and as of September, MaineCare enrollment is 48 percent greater than it was in 2001. But since 2001, Maine’s population has grown by only 4 percent.

Now we are facing another Medicaid expansion. The people of Maine voted for it, and it needs to be implemented. But it should be done responsibly, and it should not plunge the state back into that sea of red ink. We have worked too hard to see Maine return to the days of annual shortfalls, voodoo accounting, and one-time budget gimmicks.

If our state were to fund Medicaid expansion using existing General Fund dollars, MaineCare’s share of the General Fund would grow to 25 percent, or one-in-every-four tax dollars that Mainers send to Augusta. That would begin to cannibalize other General Fund priorities, just as during the last Medicaid expansion. Healthcare, social services, and education expenditures already account for nearly 80 percent of General Fund expenditures. Taking more General Fund dollars for Medicaid means taking them away from other state agencies.

Medicaid expansion can be funded responsibly and without harm to the General Fund. It can be funded via the existing hospital tax. At a cost of nearly $100 million annually, the Legislature has not yet identified a sustainable means to fund this significant new expenditure. If legislators fail to identify another permanent funding source, tax dollars will be required to support expansion.

Tax dollars in the General Fund come from Maine’s hard-working taxpayers. They should not have to foot the bill for another Medicaid expansion. Since the hospitals stand to benefit by at least $100 million from expansion, the new revenue they receive would more than cover any tax expense, and the hospitals would still come out ahead financially.

The federal government allows the tax as a reimbursable expense. Therefore, the federal government would reimburse at least 60 percent of the tax at current rates.

I will be leaving office in a few days. But I will be watching. My administration and my staff and so many good people in state government have worked much too hard for much too long to simply sit back and watch a new administration drive Maine’s finances and its economy back into the ground.

I wish the new administration much success. But if they start up the financial shenanigans we saw in previous administrations, I will promise you this: I’ll be back. Thank you for listening. Have a happy and healthy 2019.

Paul LePage


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