AUGUSTA — Maine’s highest court will hear arguments Wednesday over the LePage administration’s refusal to begin offering Medicaid coverage to tens of thousands of additional adults.
Meanwhile, lawmakers and a representative for Maine’s hospitals say they have yet to see a formal plan from Gov. Paul LePage’s office detailing a proposal he made last month to pay for Medicaid expansion by increasing taxes on hospitals. LePage wants Maine to follow the lead of eight other states that have used hospital taxes or provider fees to cover their share of Medicaid expansion costs with the expectation that hospitals will have to provide less uncompensated “charity care” if additional individuals have health coverage.
But it’s unclear how hard Maine’s Republican governor – a staunch opponent of Medicaid expansion who recently vetoed an initial funding bill – plans to push for the hospital tax after getting a chilly initial reception from Democratic leaders.
“If he has a serious proposal to present, he can submit a bill,” said Mary Erin Casale, spokeswoman for House Speaker Sara Gideon, D-Freeport. “That is the way things move forward in the Legislature.”
In the latest legal wrangling over the voter-approved law, the LePage administration will plead its case for why it should be not required to file an expansion plan with federal officials because the Legislature has not appropriated money to cover the additional costs. Attorneys for Maine Equal Justice Partners, on the other hand, are expected to argue that LePage is obligated to follow the law passed by voters in November 2017 to expand Medicaid to an estimated 70,000 lower-income Mainers.
Last month, a Kennebec County Superior Court judge ordered the LePage administration to file a Medicaid expansion implementation plan to federal regulators by June 11. The administration appealed to Maine’s Supreme Judicial Court and secured at least a temporary reprieve from the filing deadline while the justices consider the case.
The court is likely to hear dueling arguments during Wednesday’s hearing about the issue of funding Medicaid expansion.
LePage has argued since the November 2017 referendum that he would not expand Medicaid to cover individuals earning up to 138 percent of the federal poverty level until the Legislature funds it. Last month, the Legislature approved a bill earmarking $60 million in initial funding for the expansion only to have LePage veto the measure and House Republicans join with the governor to block supporters from overriding that veto.
“I think the Legislature has spoken: they did not fund it,” LePage said last week during a radio interview. “If they’re not going to do it right, it’s just not going to happen. The one thing I know is nobody can force me to put the state in red ink and I will not do that. I will go to jail before I put the state in red ink. And if the court tells me I have to do it, then we’re going to be going to jail.”
But advocates counter that the only reason the Legislature hasn’t been able to fund expansion is because LePage vetoed the bill. LePage also has yet to formally flesh out his proposed hospital tax funding mechanism – a proposal offered at a time of pitched, behind-the-scenes negotiations on a host of unresolved issues including Medicaid expansion, Clean Election Act funding, a bond package and a “tax conformity” package important to the governor.
“I haven’t seen any paperwork,” said Jeff Austin, vice president with the Maine Hospital Association, which is opposed to any tax increase. “I think it’s basically just an idea.”
Federal law allows states to levy a tax of up to 6 percent on revenue hospitals collect for providing services to patients. Maine currently taxes hospitals at 2.23 percent – collecting $103 million in 2016 – and the LePage administration argues that increasing that rate would provide more than enough money to cover Medicaid expansion costs.
“Since Maine hospitals stand to benefit the most from the expansion of Medicaid, this is a more than reasonable means of financing that program’s expansion costs,” the governor’s office said in a statement. “The tax is assessed on each hospital based on the revenue generated from the services they provide. … The governor believes that Medicaid expansion will decrease both the amount of charity care and bad debt carried on hospitals’ books, and that will offset the increase in the hospital tax to pay for Medicaid expansion.”
Maine hospitals reported $570 million in “charity care” and “bad debts” or unpaid bills in 2016, more than double the $227 million reported a decade earlier, according to a Maine Hospital Association report.
But Austin, the association’s vice president, said hospitals are already subsidizing Medicaid expansion and can’t afford to pay more, even with the prospect of lower “charity care.” During the congressional negotiations over the Affordable Care Act, hospital associations agreed to accept smaller annual adjustments to Medicare reimbursements in order to help cover the federal share of Medicaid expansion.
“We already gave,” Austin said. “We can’t pick up the whole thing for the state.”
LePage frequently points to the more than $800 million in construction underway or planned at Maine hospitals – including Maine Medical Center’s $512 million expansion – as evidence that hospitals are doing well financially. Yet Austin pointed out that 19 of Maine’s 35 hospitals lost money in 2016 and that the two hospitals undertaking the vast majority of that construction – Maine Med in Portland and Eastern Maine Medical Center in Bangor – were among the minority operating in the black.
In fact, Austin added, those two hospitals were the only reason Maine’s hospital system reported positive revenue flow in 2016. If you remove Maine Med and EMMC from the equation, the 33 other hospitals in Maine collectively lost $50 million that year. Doubling the hospital tax could tip some of those struggling hospitals over the edge, resulting in facility closures that would severely impact the surrounding communities, he said.
“It’s not good to have half of the hospitals in the state losing money,” Austin said.
LePage spokesman Peter Steele said Tuesday that the governor has yet to put together a formal proposal on the hospital tax. In television and radio interviews, LePage called the Legislature’s proposal to initially fund the expansion with $35 million in tobacco settlement funds and $25 million in surplus state revenues “a gimmick,” and accused Gideon, the House speaker, of rejecting his hospital tax proposal.
Gideon’s office, however, said they have yet to see a formal proposal.
“The governor’s office has the ability to submit a bill at any time when we are in session,” said Casale, Gideon’s spokeswoman. “If the governor is interested in doing that, we are in session but we have yet to see that happen.”
It’s unclear how Maine Gov. Paul LePage intends to push for a hospital tax.
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