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Maine's Efforts To Pare Medicaid May Put It On Collision Course With Administration

Jul 12, 2012

In what is shaping up as the first state-federal showdown on Medicaid following the Supreme Court's ruling on President Barack Obama's health law, Maine is moving ahead with plans to cut thousands of people from its rolls to balance its state budget.

Maine Gov. Paul LePage speaks at a Dec. 2011 news conference in Augusta, Maine, to defend proposed cuts to Medicaid. (AP Photo/Robert F. Bukaty)

Advocates and health experts contend some of those cuts, affecting about 26,000 people, violate a provision of the law barring states from making it harder for people to join the government health insurance program for the poor.

Among those who would lose health care coverage as early as September are nearly 15,000 Maine parents with incomes between the federal poverty level ($23,050 for a family of four) and 133 percent of the poverty level ($30,657), as well as 6,000 19- and 20-year-olds who have been covered up to 150 percent of the poverty level ($34,575 for a family of four).

The dispute stems in part from different interpretations of the Supreme Court's ruling, which upheld the health law but made its 2014 expansion of Medicaid effectively optional for states. 

Maine Gov. Paul LePage, a Republican, and Attorney General William Schneider said the recent court ruling means the state no longer needs to seek a special waiver from the federal government to enact cuts to Medicaid. They say the provision of the law known as "maintenance of effort," which prohibits states from cutting eligibility for Medicaid, is no longer valid.

However, in a letter to governors Tuesday, Health and Human Services Secretary Kathleen Sebelius strongly suggested otherwise. She asserted the high court's ruling leaves every provision of the law standing except the one that would have penalized states for not expanding Medicaid. The expansion is intended to provide 17 million additional Americans with health coverage.

Whether Maine officials will strike a deal with the federal government is unclear.  LePage, in a letter to Sebelius on Wednesday, said the state will send more information to her agency as part of a "state plan amendment," meaning a permanent change to the program.

"I know you take your duty to uphold the Constitution and laws of the United States seriously and will reserve judgment until the law and facts are fully presented," he wrote.

The Obama administration has shown flexibility in permitting some eligibility rollbacks by other cash-strapped states such as Wisconsin, Illinois and Hawaii.  To date, however, the administration has not permitted any state to drop eligibility below 133 percent of the federal poverty program, as many (though not all) of Maine's cuts would do. 

Under the health law, starting in 2014, everyone making below that level will qualify for the program. Today, states set different eligibility levels, and few offer coverage to childless adults.

LePage has been an outspoken opponent of the health care law, recently criticizing the Supreme Court’s decision to uphold most of its provisions as an erosion of freedom that would give individuals no choice but to buy health insurance or "pay the new Gestapo — the IRS."

He subsequently apologized for using the word "Gestapo," saying the word had clouded his message.

Advocates for the poor in Maine say the state’s plans go further than the federal government has allowed other states.

"We really want the state to hold off and not move forward," said Ana Hicks, senior policy analyst for Maine Equal Justice Partners, an advocacy group. 

Jocelyn Guyer, co-executive director of the Georgetown University Center for Children and Families, said the plan "very clearly violates the maintenance-of-effort requirement. Maine is asking for trouble by pursuing this path."

States and the federal government share the cost of Medicaid, with the federal government paying on average 63 percent of expenses in Maine.  The state has about 350,000 people enrolled in the program.

Under the law, the federal government would pay the full cost of the expansion from 2014 until 2017, after which states would pay a portion that cannot exceed 10 percent.

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