As Maine Faces Spending Cuts, Advocates Say Federal Aid Can Spare Medicaid

Aug. 19--AUGUSTA, Maine -- Health care advocates in Maine are waiting to see if a deadlocked Congress will boost a federal Medicaid funding match provision as the state prepares across-the-board spending cuts due to the coronavirus pandemic.

The state faces a projected $1.4 billion revenue shortfall over the next three years. Gov. Janet Mills has ordered department heads to identify 10 percent budget cuts to offset revenue losses. That money could be curtailed absent federal aid. The proposals are due Wednesday.

Advocates for hospitals and nursing homes worry cuts could have dire consequences for low-income Mainers, particularly those on Medicaid. That population has increased dramatically during the pandemic as people have lost medical insurance through employers.

They say an earlier increase in a federal reimbursement rate to states for most Medicaid services -- or the FMAP -- was crucial to keeping providers' doors open as the pandemic drags on. That federal increase will last as long as a federal emergency declaration does, but the fate of additional aid remains uncertain amid stalled stimulus talks in Congress.

"If they do the FMAP, it means less hard choices for the state," said Jeff Austin, a lobbyist for the Maine Hospital Association.

Medicaid is a major part of Maine's budget. The state allotted $1 billion for state-funded MaineCare programs in the last fiscal year and spent about 87 percent of that. But more Maine residents had to turn to the state's safety net programs during the pandemic, largely because of skyrocketing unemployment caused by the virus-induced recession.

Enrollment in MaineCare has increased 7 percent since February, with Medicaid expansion seeing a 27 percent increase as people have been laid off from jobs, according to state data. More people means more costs will increase, further stressing the Maine budget as the state projects a $1.4 billion shortfall over the next three years.

Maine's FMAP is 63 percent this year, but the Family First Coronavirus Response Act added 6.2 percentage points to every state's match. House Democrats want to raise the ongoing added rate to 14 percent, while Senate Republicans have proposed no increases.

The additional aid has been critical during the pandemic for nursing homes, said Richard Erb, the CEO of the Maine Health Care Association, which represents nursing homes in the state. Those facilities have faced increased costs in personal protective gear during the pandemic, combined with a reduction in new residents.

But Maine has not made cuts to eligibility, rates or services during the pandemic, things that Erb said have made the increased costs to facilities more bearable. With the impending shortfall on the horizon, he said additional aid is "extremely important."

"It's hard to see how Maine or any other state could go it alone right now," he said.

Other states have chosen to make reductions. Nevada cut Medicaid reimbursement rates and speciality care programs. Florida Gov. Ron DeSantis vetoed $38.4 million that would have been used to increase Medicaid rates for services for people with disabilities. Tennessee cut a proposed $6.6 million worth of care for postpartum services.

The Mills administration has been pushing for the continuation of the increased match as part of overall lobbying efforts to get more federal aid, but how it will play into the budget process remains to be seen. A DHHS spokesperson said the state "is committed to budgeting prudently so that Maine people don't lose access to critical health care coverage."

There is evidence increasing the federal match has made a difference to states during previous recessions. The U.S. Government Accountability Office found most states cited an increase to the rate during the 2009 recession as "integral" to maintaining levels of service.

Hospitals have been hit due to scheduled procedures like annual checkups being put off by the pandemic. Their utilization has not rebounded even though scheduled procedures were one of the earliest activities given the green light under Mills' reopening plan. Inpatient admissions claims are down 28 percent from Feb. 1, according to DHHS data.

Austin of the hospital association said his group's interest in an increase is not because it will directly benefit hospitals, although the state could choose to use it to help providers. Rather, he said any increase in federal aid lessens the chance that state-level Medicaid cuts will be made.

Kathy Kilrain Del Rio, the director of campaigns and health care advocacy at Maine Equal Justice, said similar actions could cause providers to either stop accepting MaineCare. That would disproportionately affect Black people and people of color, who are already facing outsized health disparities due to the pandemic.

"It seems like common sense that the last thing we would want to do during a pandemic is to cut access to health care," she said.

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