Mills: New tobacco settlement cash could fund Medicaid expansion

April 03--Attorney General Janet Mills said Tuesday she has found a funding source for expanding Medicaid in Maine, which could snuff some arguments against expansion but is sure to cause ongoing controversy about her authority to spend the money.

Mills, a Democrat who is running for governor, said during a Tuesday news conference at the State House that as the result of recent negotiations with tobacco companies, Maine will receive an additional $35 million over what was previously expected, during the next year. Mills suggested using the funds to expand Medicaid eligibility and said the money would cover the expansion costs through the end of the current two-year budget cycle in June 2019.

"These funds are available to pay for Medicaid expansion as enacted by the people in November, in the current biennium," Mills said.

Republican Gov. Paul LePage called Mills' plan a "one-time budget gimmick to fund Medicaid expansion."

"This political stunt would be nothing more than a down payment on giving free health care to 80,000 people, which will require ongoing and sustainable funding," LePage said in a written statement.

Maine already receives annual payments of approximately $46 million from the 1998 Master Settlement Agreement between major tobacco companies and numerous states. The $35 million referenced by Mills is one-time money, which means the next governor and Legislature would have to grapple with ongoing costs after this year's election. That would conflict with one of the key stipulations set forth by LePage.

Maine law says the tobacco settlement money, which flows into the Fund for a Healthy Maine, should pay for "health care for children and adults, maximizing to the extent possible federal matching funds." Current estimates are that the federal match for state spending on Medicaid expansion would be more than $500 million.

Mills' announcement came on a deadline day as laid out in the 2017 citizen-initiated referendum. According to the law, which was passed by 59 percent of voters last November, Tuesday is the deadline for the Department of Health and Human Services to submit a state plan amendment to the federal government regarding how Maine will move forward with Medicaid expansion under the provisions of the Affordable Care Act.

There's no indication that has happened or is in motion. LePage has said for months that his administration won't do anything to accommodate expansion unless the Legislature finds a way to pay for it in the long term without tax increases or tapping state's rainy day fund. LePage also demands that waitlists of elderly and disabled people awaiting social services be eliminated before expansion.

Democrats have countered that they don't need to find a funding source this year because Maine has enough to cover start-up costs in the state's existing Medicaid coffers.

The Republican governor has criticized Mills in the past for her ideas about how to spend settlement money. In 2017, LePage ordered the state controller to transfer nearly $11 million that was under the sole discretion of Mills to another account controlled by the Legislature. Mills said Tuesday that the tobacco settlement money can't be swept like the other money was.

The Legislature's fiscal office has said covering newly eligible Medicaid recipients will eventually cost about $55 million a year after accounting for $28 million in savings because of people moving to Medicaid from other public social service programs. The LePage administration has said the state's annual cost will likely be at least double that and ruinous to the state's budget.

Mills' announcement came on the heels of another news conference where Medicaid expansion supporters called on the executive branch to abide by the law. One was Donna Wall of Lewiston, whose full-time job is caring for her three adult children, all of whom have been diagnosed with autism. She said she would qualify for Medicaid under expansion, though it isn't in time to avoid medical debt she accrued last year when she broke her ankle delivering newspapers.

"I went to the hospital," she said. "I knew I couldn't afford to pay, but what else could I do? Today, I have over $62,000 in medical bills."

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