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Report says fund Gov. Mills uses to pay for Medicaid expansion is falling short

Governor Janet Mills signs a document as Speaker Sara Gideon, Senate President Troy Jackson and others look on.

AUGUSTA – Governor Janet Mills wasted no time when she took office in expanding Medicaid under the federal Affordable Care Act. The program, she said, would provide health care to tens of thousands of low income Mainers with matching federal funds that the state should no longer refuse.

As lawmakers now consider the critical funding components Mills proposes to pay for the expansion which she put in motion through an executive order on her first day, the funding she is relying on to keep the program solvent is coming up short. That news came in the form of a report from Maine’s Revenue Forecasting Committee, the official authority lawmakers rely on for state budget revenue projections.

It was never entirely clear to many lawmakers and policy experts how Governor Mills planned to make the Medicaid expansion financially sustainable in the long term. A report from the Maine Heritage Policy Center said Mills was relying too heavily on one-time funding sources and that her budget proposed about $30 million less in funding than would be needed according to official projections.

But now one of those one-time funding sources Mills’ budget proposes using to fund the expansion is also coming up short as well. That funding source, the Fund For a Healthy Maine, recently saw a downward revision of 40% in projected revenue in the Maine Revenue Forecasting Committee’s May 2019 report.

The report says that revenue to that fund in Fiscal Year 2021 will be about $10 million lower than previously estimated, and that in Fiscal Year 2022 the same drop in revenue, about $10 million, can be expected.

Compounding matters according to the report from MHPC, is that every Medicaid expansion state that had publicly accessible data as of 2018 experienced a “slight to severe” cost overrun. That suggests Mills’ proposed Medicaid expansion budget could already be problematic.

If Maine’s cost overrun were to meet the average of those other Medicaid expansion states in the MHPC report, the cost would be nearly double what Governor Janet Mills’ budget projects.

With a key source of funding now projected to come up short, those potential problems are being noticed. Senator James Hamper, a member of the Legislature’s Appropriations Committee, mentioned his concern about the Fund for a Healthy Maine revenue projections in a radio interview on the George Hale Ric Tyler Show earlier this week.

Another Appropriations Committee member, Rep. Nate Wadsworth of Hiram said in the Republican’s weekly radio address, “The Fund for Healthy Maine, an account the Governor leans heavily on to support Medicaid expansion, is projected to have a forty percent loss in revenues, bringing in to doubt the state’s ability to pay for some of the Governor’s proposals.”

So while the Maine media’s headlines from the latest Revenue Forecasting Committee report mostly focused on good news from some one-time funding sources, lawmakers will be forced to grapple with key questions in the final weeks of considering the Mills budget proposal.

First, is the amount being proposed enough to cover the actual costs Maine will incur from Medicaid expansion? Second, where do they go to replace the funding they are now being told they won’t have from the Fund for a Healthy Maine?

Only time will tell how lawmakers will grapple with this less than optimal news about the long-term sustainability of the Medicaid expansion. That time is now growing short with the Legislature’s legal requirement to approve a new two-year state budget in June.

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