There has been no shortage of political drama in Augusta during the past few weeks. The brinksmanship reached a boiling point after Governor LePage stormed out of a meeting of the Appropriations Committee when Democratic co-chair Sen. Dawn Hill (D-York County) refused to let him address the committee.

"It's unfortunate that the people of the state of Maine are being played for patsies," he said before making a b-line for the door last Sunday afternoon.

It all comes down to Maine's $484 million Medicaid debt to 39 hospitals and a federally proposed expansion in health insurance coverage for low-income Mainers. Democrats have agreed to Governor LePage's plan to borrow the money to pay off the hospitals by issuing a revenue bond secured by future liquor sales. However, Democrats have also passed a bill to tie that plan to accepting the Medicaid expansion.

Due largely to rising health care costs, a $96 million settlement the state paid to 21 hospitals in 2006 and strained state budgets, Maine's hospital debt has risen sharply over the past decade, peaking at $546.4 million in 2008. In 2009, Democratic lawmakers passed a law to change the hospital reimbursement system, which put an end to the accrual of debt, but it wasn't fully implemented until last year.

However, Republicans blame the 2002 Medicaid expansion for the hospital debt, deriding it as a "welfare expansion" that taxpayers couldn't afford. Under Democratic leadership the state expanded Medicaid coverage to include childless adults earning 100 percent of the poverty level ($15,510 for a two-person household) and some moderate-income parents. This resulted in a 78-percent increase in Medicaid enrollment between 2002 and 2011 to about 361,000 people, according to the Department of Health and Human Services. The last state budget cut 12,600 parents off those rolls. Now Maine is being offered another Medicaid expansion; this time under the federal Affordable Care Act (aka Obamacare).

According to the ACA's Medicaid expansion guidelines, individuals with annual incomes of up to 133 percent of the federal poverty level ($15,282 for an individual and $20,628 for a two-person household) would qualify for Medicaid coverage, which covers 100 percent of health care costs. Everyone else making between 133 and 400 percent of federal poverty levels will be eligible for federal subsidies to buy private insurance. In Maine, about 48,000 people would be eligible for the expanded Medicaid coverage. Last year's Supreme Court ruling allows states to opt out of the expanded coverage. According to the Kaiser Family Foundation, so far 29 states have agreed to participate, 20 have opted out of participating, which so far includes Maine.
Democrats and an alliance of 85 organizations including the Maine Medical Association have been stepping up the pressure on Governor LePage to agree to accepting the Medicaid expansion. The federal government has agreed to fund the expansion at 100 percent from 2014 to 2016, before gradually dropping to 90 percent in 2020. Advocates for expansion say that the expanded coverage will lead to less bad debt and fewer uninsured patients needing free medical care, which amounted to about $450 million last year, according to the Maine Hospital Association.

"Under the comprehensive plan proposed by Democrats, hospitals would be paid $485 million in back debt rightfully owed to them and on top of that they would also receive an additional $163 million a year in federal dollars for treating newly insured Maine residents," wrote House Democrats. "This brings in more insured patients, increases patient volume and eliminates a major cost driver in the health care system." 

Supporters also point out that the measure would pump $250 million in federal funding into Maine's economy. It's estimated that 25,000 Mainers would lose Medicaid coverage in 2014 if the state chooses to opt out.

Republicans say they don't believe that the feds will fulfill their obligations to fund their share of the Medicaid expansion, leaving the state to pick up the tab. Democrats counter that the federal government has fulfilled all of its matching payment obligations for Medicaid since 1965. Democrats also cite estimates from the non-partisan Kaiser Foundation and the conservative Heritage Foundation that show Maine would save $690 million to cover nearly 70,000 people over the course of a decade and would be one of 10 states that would see Medicaid expenditures go down over 10 years if the state accepted the expansion.  

Legislature Passes Repayment & Expansion; Veto Looks Imminent

Over the past year, Governor LePage has stirred up controversy for vowing not to release $104 million in voter-approved bonds for transportation and infrastructure projects until Democrats agree to pay off the hospital debt. Now Democrats have come up with their own deal. Under the plan, Democrats will accept the governor's initiative to pay off the state's $181 million share of back payments to hospitals with a revenue bond leveraged against future liquor tax revenues, as long as the governor agrees to accept the Medicaid expansion. So far, Governor LePage has not been impressed with the proposal.

"Folks, let's call it what it is. Medicaid expansion is welfare expansion. That is a completely separate issue than paying the hospitals the half-a-billion dollars we owe them," LePage said in his May 3 radio address.

In his most recent radio address, LePage said a more cost-effective option would be for low-income Mainers to take advantage of upcoming ACA subsidies to pay for private health insurance. The intent of the ACA is to make Medicaid coverage available to people making less than 133 percent of the poverty level and provide subsidies to people making over 133 percent to buy private insurance. But due to a drafting error in the ACA, currently subsidies are available to individuals making between $11,490 per year (100 percent of poverty level) and $15,282 (133 percent). For the 28,000 Mainers below 100 percent of the poverty level, there will be no MaineCare coverage or subsidies available if Maine chooses to opt out of expansion. Supporters of Medicaid expansion say that although some low-income Mainers would qualify for subsidized insurance, they would have trouble covering copays and out-of-pocket expense.

"A lot of people who are earning that kind of money are really living paycheck to paycheck, so we feel that the Medicaid coverage would be a more robust coverage and a lot more accessible to them," said Michell Stein, policy director for Maine Consumers for Affordable Healthcare.

Meanwhile, Republicans have suggested forming a study group to weigh the benefits of Medicaid expansion. Democrats have panned the idea as a stalling tactic.

On straight party lines, the Legislature passed the Democratic plan this week, but a governor's veto appears likely.