Governor Paul LePage introduced a supplemental budget proposal on Tuesday, which concentrates on structural problems within the Medicaid program at the Department of Health and Human Services and takes the state through the end of fiscal year 2013.

A thorough analysis of fiscal year 2012 has exposed a shortfall of $120 million and an additional $100 million in 2013.

In a bipartisan effort, the Governor met with Democrats and Republicans on Tuesday afternoon to unveil details of the new plan, emphasizing the importance of addressing over-budget spending within Medicaid. The Governor’s proposal includes restructuring eligibility, re-designing benefits and adopting payment reform, which addresses those structural problems and will put Maine’s Medicaid program on a path to financial accountability.

“It’s critical that Maine has a safety net for our most vulnerable—the elderly, the disabled and children—who need it most. But it is just as important that this safety net ensures quality access,” says Governor LePage. “We must restructure the Medicaid program keeping in mind our most vulnerable and what the state can afford.”

Medicaid in Maine provides government-run healthcare, a program that has grown beyond the state’s financial means, according to LePage. It has created increased costs for medical services; underpayment of health care providers; debts to hospitals from years of unpaid Medicaid bills; and rationing of care for the people on Medicaid. Additionally, access to providers has significantly diminished over the years as providers have closed their doors to Medicaid patients.

To recognize the magnitude of the Medicaid problem, one must first look at spending within the program, according to LePage. During the past 10 years, Medicaid spending has skyrocketed by more than $1 billion; a 45-percent increase. Medicaid today consumes 21 percent of all general fund dollars and 32 percent of all spending in Maine.

The Governor’s new proposal moves Maine toward a more affordable Medicaid program by moving the state closer to the national average and is consistent with what other states provide.

“We must prioritize the services we provide to preserve funding for Maine’s most needy and bring Medicaid back to its original purpose as a quality safety net for our most vulnerable,” said DHHS Commissioner Mary Mayhew.

Maine’s Medicaid program is one of the most generous in the country. From June of 1998 to June of 2002, enrollment in Medicaid grew from 154,000 individuals to more than 200,000 individuals. Today, 361,000 Mainers are using the program.

As Medicaid has expanded, spending has significantly risen: Maine’s per capita spending is nearly $1,900 per person, while the national average is approximately $1,100 per person; and total state and federal spending on Medicaid has increased by over $1 billion in 10 years.

Additionally, paying for the program has become increasingly difficult due to federal cuts. In fiscal year 2012, federal Medicaid reimbursement to Maine has been reduced by more than $210 million.

During the last three years, the money used to fill in the gaping budget hole was from one-time federal stimulus funds. This gimmick allowed DHHS to sustain its expenditures and make it appear the budget was balanced. The Governor and Commissioner Mayhew stand firm that the state can no longer use gimmicks to balance Maine’s budget.

“Difficult decisions must be made in order to make the necessary and permanent structural changes to this program,” said Commissioner Mayhew. “It is a monumental task that can only be accomplished with an acceptance of the current economic climate and a willingness to prioritize services. Now is the time to set partisanship aside and work together toward a sensible solution for all Mainers.”

House Democrats criticized the Governor’s plan, claiming the cuts are somehow tied to tax cuts for the wealthy.

“Once we fully agree on the size of the gap, Democrats are committed to working with Republicans to find a fair solution that is based on a comprehensive review of the entire budget,” said Rep. Peggy Rotundo (D-Lewiston), the lead House Democrat on the Appropriations Committee.

“We won’t help the governor pave the way for tax cuts for the wealthy, while paying for them on the backs of struggling Maine families, the elderly and the disabled,” she said.

“The governor has taken the wrong approach to finding common ground with this dangerous and shortsighted proposal,” said Rep. Emily Cain (D-Orono), the House Democratic leader, called the governor’s plan dangerous and shortsighted. “The proposal puts our economy in jeopardy and undermines public health and safety,” she said. “It hurts Mainers who are already struggling with absolutely no plan to get people back to work.”

The governor’s budget released this afternoon includes taking away health care for more than 44,000 Maine people and dramatically reduces critical services, like prescription drugs for the elderly and dental care.  The proposal also nearly eliminates wide health protections, like the child immunizations, from the Fund for Healthy Maine. These proposals were rejected by both Republicans and Democrats during budget negotiations earlier this year.

The budget shortfall has ballooned from one week to the next with very few details on why the fluctuations keep occurring. Maine Health and Human Services Commissioner Mary Mayhew told the Appropriations and Financial Affairs Committee her department was facing a $70 million budget gap for fiscal year 2012 in early November. Two weeks later she told the committee that number had grown by more than $50 million to $121 million.

“We have yet to get an answer on why the Department of Health and Human Services has not been able to get a handle on accurately projecting and managing its costs.” said Rep. Peggy Rotundo, D-Lewiston, the lead House Democrat on the Appropriations Committee. “We won’t be rushed into making any decisions until we have an accurate accounting of the figures.”