The state’s fiscal year begins in July giving lawmakers three months to work out the issue. LePage went on to tell legislators that their failure to cut $221 million from the budget will force him seek cuts to state education to close the gap.

“I will be calling you back and asking you to give the GPA money so that I don’t have to close nursing homes and we will probably close schools, ” he said. “Or by Feb. 1st, you give me curtailment orders so I can start saving money. This is not normal politics, this not rhetoric.”

But this issue would not be able to be classified under a curtailment order.

A curtailment gives executive power to limit spending only when revenues fall short, not when a program outspends its authorized limits.

“This is a program spending issue and wouldn’t fall under the statutory curtailment authority,” said Grant Pennoyer, director of the nonpartisan Office of Fiscal and Program Review to the Bangor Daily News.

The encounter with Gov. LePage in the committee happened after Health and Human Services Commissioner Mary Mayhew responded to a Medicaid waiver question. LePage had unexpectedly shown up to listen and fidgeted in his chair. Sen. Richard Rosen invited the governor to the speaker’s table where LePage tried to bully lawmakers.

Previously Democratic Appropriations Committee members had asked the director of the federal Centers for Medicare & Medicaid Services (CMS) whether the administration’s plans to ask for a waiver from the Affordable Care Act were likely to be granted. CMS Director Cindy Mann replied that to date no state’s request for a waiver of the law has been approved. Which represents $37 million of the $220 million in cuts the administration is proposing. Democrats are worried that the proposed budget may be $257 million because the state has no guarantee they will get the waiver.

Rep. Peggy Rotundo,who serves on the Appropriations Committee, said a letter she received from a federal official this week makes it clear that Maine won’t qualify for waivers to make the cuts.States can get waivers to reduce services only for experimental, pilot or demonstration projects.

“Were not talking about a pilot project. We’re not talking about a demonstration,” said Rep. Rotundo.

However, LePage said he could convince U.S. Secretary of Health and Human Services Director Kathleen Sebelius on the merits of Maine’s plan.

“So I just urge you all to really get this done because I need to get to Washington and try to sit with the secretary and convince her,” said LePage.

With fifty states, with separate needs what Sebelius does in one effects them all. If the secretary grants Maine’s request other states may wish to follow. Federal waivers are complex and never should be viewed as a sure deal like LePage’s proposed supplemental budget treats them.

“We are here representing the people who cannot be here to speak for themselves. We are here because we believe Maine can do better,” said Betsey Sweet, a founding member of the Maine Can Do Better coalition. “We believe the budget proposal is irresponsible. And while some politicians only think as far as the next election, we are Mainers for the long haul. When we look at the numbers, it is clear that we don’t have a fiscal crisis, we have a priorities crisis.”

Gov. LePage’s budget proposals would eliminate health care coverage for thousands of Mainers, while ending prescription drug coverage for elderly Mainers, reducing services and supports for the elderly and people with disabilities, stopping funding for preventative public health and eliminating state support for Head Start, among a long list of cuts to important programs that help our state’s most vulnerable populations.

“Let us invoke the spirit of compassion to be in our midst tonight, and in the gathering about to happen inside,” said Rev. Jill Saxby, the executive director of the Maine Council of Churches. “It’s been said that all we need to prosper as a state or a nation is the invisible hand of capitalism. But we know that while the free market may have an invisible hand, it does not have an invisible heart. We must supply the heart ourselves. We’re here tonight to make that heart visible, with our presence, with our words and with these lights.”

The Maine Can Do Better Coalition made the decision to hold the vigil because members believe that the voices of voters matter to Maine’s elected officials.

“As the most powerful people in the state gather inside to hear the words of the governor, we want them to see that there are people behind all those numbers in the state budget. That they have faces, and names, and stories,” said Ben Dudley, the executive director of Engage Maine, a Maine Can Do Better partner organization. “And all the political rhetoric, big numbers and false choices in the world can’t erase them or make them go away. We will not turn our backs and let them face these hard times alone.”

“It is unconscionable that the Governor is using school children as leverage for his agenda,” said Sen. Alfond. “Maine’s Constitution is clear. The Governor does not have the authority to shut down Maine’s schools.”

According to the Lewiston Sun Journal, the governor specifically said, “If the Legislature didn’t ratify his proposed budget he would be forced to close the state’s schools.”

“The governor’s statements are not accurate, and they are not helpful in solving the problems we face,” said Rep. Emily Cain, D-Orono, the House Democratic Leader. “Making dramatic statements and presenting false choices distracts from real work and creates unnecessary fear in our communities. The Appropriations Committee is working hard to make incredibly difficult choices and find alternatives to the governor’s budget. These continued distractions will not put us any closer to solving the budget challenge. We urge the governor to focus on the facts instead of drumming up fear and blame.”

According to Steve Minster’s report, the governor also said, “some Democrats weren’t being truthful when they claimed he was overstating the funding gap. The crisis, he said, was real. He said Democrats’ expansion of Medicaid offerings and eligibility requirements made it so Mainers were shunning private insurance in favor of publicly funded health care.”

Also, during the town hall meeting in Lewiston, the Governor further misled Maine people by accusing Democrats of “being dishonest” or not being able to count in response to Democrats questioning of the DHHS shortfall.

“Apparently the Governor is out of touch with what’s really going on. Democrats and Republicans in the Appropriations Committee are working hard to solve the state’s budget issues,” said Alfond. “By making false accusations, the Governor is instigating, bullying, and ultimately distracting from the process. If he really wants the committee to ‘get going’ then he needs to let them do their work.”

The governor’s press office released this statement from LePage, “I believe Democratic leadership understands the severity of the financial situation we’re in and I’m cautiously optimistic that they are committed to working towards a resolution by February 1. . . However, in order to solve this budget crisis we cannot use gimmicks to fill the hole. There will be difficult decisions made, and if we are to bring our welfare system to a manageable level that Maine can afford we must make the necessary structural changes.”

Facts debunking other false rhetoric from the governor”
DHHS shortfall myths and facts

MYTH: The projected $220 million shortfall was caused by a growth in enrollment.

FACT: According to the Department of Health and Human Services’ analysis , the total cost of increased enrollment in MaineCare accounts for $6.5 million of the shortfall in 2012 and a projected $7.9 million of the claimed shortfall in 2013. Enrollment growth accounts for only 6.5 percent of the total projected $220 million shortfall. According to DHHS, the biggest driver in the 2012 shortfall — $29.9 million — is the result of a new claims system that caused benefit payments that should have been settled last year to be paid this year. The shortfall has been caused by his administration’s miscalculations in building the budget, a transition from claims processing from one computer system to another and a change in how we make payments to providers. These are problems related to program administration, not program growth.

MYTH: Enrollment growth is out of control. The state has spent more than it can afford on MaineCare.

FACT: According to DHHS , the total funding for the MaineCare program has been largely flat since 2006. Expenditures for the MaineCare program totaled $2.24 billion in 2006 compared to $2.44 billion in 2011. This is an increase of only 8.9 percent in expenditures over a five year period when medical care inflation has grown at a rate of 19.9 percent during the same time period. MaineCare caseloads have increased since 2002, but the costs have remained relatively flat. Growth in enrollment has largely been linked to the recession and from enrolling nearly 20,000 seniors and people with disabilities getting prescription drug help paid for with all state funds to the Medicaid program in 2007, where the state gets the benefit of federal matching funds.

MYTH: The majority of childless adults, referred to as non-categorical or non-cats, are “able-bodied” and “young.”

FACT: A new report from the Maine Equal Justice Partners, conducted with a leading physician and other expert, shows that the recipients are typically older than has been claimed and have serious medical conditions. Key findings from the report include that 60 percent of recipients in this group are 35 or older; 43 percent are 45 or older; and 47 percent of those using the program have diagnosed medical conditions, such as cancer and diabetes. Recipients of public health insurance must earn at or below 100 percent of the federal poverty level, which is $10,890 a year for one person. The state will be required – and will be compensated by the federal government – to cover these adults under the Federal Affordable Care Act in 2014.

MYTH: The Office of Fiscal and Program Review(OFPR) verified the LePage Administration’s shortfall analysis.

FACT: The Legislature’s non-partisan fiscal office confirmed that DHHS was on track to spend the $120 million over budget in fiscal year 2012, but they were unable to independently verify the costs for 2013 or to fully agree on the cost drivers for either year. There has been no agreement on which costs are one-time versus ongoing. According to the Bangor Daily News, OFPR Director Grant Pennoyer told the Appropriations and Health and Human Services Committees that his office was “closer, but we are still a ways off from having a good enough understanding to provide independent confirmation of the shortfall.”

MYTH: MaineCare is welfare.

FACT: MaineCare is a health care program. It provides health insurance and prescription drug coverage for the elderly, disabled, mentally ill and the poor. Seventy percent of enrollees are either children, seniors or individuals with disabilities. The health care needs of those who will lose coverage under the governor’s budget will not go away. Deprived of their insurance, their health will no doubt decline, unattended problems will become more severe and costs will be shifted to hospitals and people in the private insurance market. We have a health care crisis in this country with more of our neighbors unable to pay the costs for health coverage. MaineCare is filling the gap. Maine is tied for 6th in having the lowest uninsured rate in the country. MaineCare has helped Maine be ranked as the 8th healthiest state in the country. This high rate of insurance also means fewer uninsured patients turn up at emergency rooms for expensive care that is not reimbursable. When that happens hospitals must eat those costs, which results in costs that must then be passed on to private insurers.

Maine has now received $39,981,695 from LIHEAP this season, which is drastically lower than the amount it received last year. Michaud recently sent a letter to President Obama asking him to request $5.1 billion for LIHEAP’s budget next year, which is a level that would represent full funding for the program.

“This funding is needed, but it’s not enough,” said Michaud, who’s working with New England’s congressional delegation on a bill to address LIHEAP’s funding shortfall. “President Obama needs to request full funding from the start so that Congress is less likely to move forward with another deep cut to this critical program.”

A complete HHS list of additional LIHEAP funds available to states today can be found here .

“In 2010, the almost $42 million in Circuit Breaker refunds enabled families to make ends meet and seniors on fixed incomes to pay for medicine and other basic necessities,” said Maine Center for Economic Policy (MECEP) Legislative Director Dan Coyne “Recent MECEP analysis found that the 2010 Circuit Breaker refunds generated significant economic activity, including $8.4 million in health care spending, $7.3 million toward housing, $3.9 million in retail spending, and $1 million toward education. These two bills will make it more difficult for eligible taxpayers to apply for property tax relief when the Legislature should instead be strengthening and simplifying this vitally important program.”

MECEP noted that Maine Revenue Services records show that more than 75,000 Maine taxpayers received general refunds and another approximately 13,000 received senior refunds under the Circuit Breaker Program last year. The average general refund was approximately $492 and the average senior refund was about $369. Despite the Circuit Breaker’s proven value, an estimated half of those eligible do not apply for and receive a refund due to a variety of barriers that discourage participation. Specifically, the cumbersome application process and failure to synchronize the application process with the income tax may place particular burdens on prospective applicants. MECEP also urged the Legislature to revisit its decision last year to cut the Circuit Breaker program by 20%.

“At a time when too many are struggling to make ends meet, we should be pursuing tax policies that will put more money into the hands of working Mainers,” said Coyne. “Failing to restore the 20% cuts to the Circuit Breaker means that many working families will actually see their taxes increase. This is particularly troubling since 2009 figures indicate that the bottom 20% of Maine taxpayers, on average, paid 8.3% of their income in property taxes while the top 10% paid just 3.1%. Mainers need our legislators to reject measures that will discourage participation and act to streamline the application process and expand the Circuit Breaker’s fair and economically sound property tax relief.”

“It is crystal clear that the Governor’s budget doesn’t add up,” said Senate Democratic Leader Barry Hobbins of Saco. “It is frustrating that Democrats are ready to work on solving our state’s budget issues but we cannot talk about a solution if we don’t yet understand the problem. Rushing in to policy changes or program cuts without real numbers would be irresponsible.”

Highlights of the one and half page letter by Grant Pennoyer, Director of OFPR, include:

1. OFPR is “still unable to adequately estimate the shortfall amount”;

2. OFPR has “not yet confirmed the one-time elements even within the first half of the current fiscal year to adequately predict the 2nd half of FY 2012, let alone FY 2013 or structural shortfall”;

3. OFPR does “not have access to the claims data underlying the accounting data”;

4. OFPR “cannot independently confirm DHHS estimates of the shortfall”;

5. DHHS based the shortfall on “incremental approach with multiple explanations for the causes of the shortfall but failed to explain some of the elements in the program that may be less than anticipated.”

In reaction to Governor LePage’s assertion that OFPR confirmed the DHHS budget analysis, Democratic Leader, Senator Barry Hobbins, and Assistant Democratic Leader, Senator Justin Alfond, wrote to the OFPR seeking clarification of its analysis of the DHHS budget. [Letter attached]

“There is a clear pattern of the Governor choosing to only tell part of the story to Maine people,” said Sen. Alfond of Portland. “Beyond misleading, the Governor has gone out of his way to interrupt and interfere with the bipartisan efforts of the Appropriations Committee. It is time for the blame game, distractions and rhetoric to end.”

Senator Dawn Hill, who serves on the Appropriations and Financial Affairs Committee, has sought accountability and explanation from DHHS Commissioner and staff since the budget was first presented to the committee back in December.

“We continue to have more questions than answers. And unfortunately, the questions that remain hit to the heart of the credibility of this budget,” said Sen. Hill of York. “How can we be expected to make decisions about the real impact to real people’s lives when we can’t even substantiate the shortfall and the numbers supposedly creating it.”

“The report underscores that this law has created health care winners and losers,” said Rep. Sharon Treat, the lead Democrat on the Insurance committee. “Younger Mainers living in the south will see lower costs from the Republican plan, while older, sicker people or small businesses in rural parts of the state will literally pay the price.”

The report, conducted by Gorman Actuarial , was presented to the Insurance and Financial Services Committee today.

“Gorman Actuarial found that thousands of older Mainers and small businesses in rural Maine must now pay more for health insurance under the new law,” said MECEP Executive Director Garrett Martin. “It validates MECEP’s analysis last spring which warned that while some individuals and businesses would realize lower rates, others would see their costs increase. PL90 is a flawed law that the Governor and the Legislature must act to fix. It gives too much power and profits to private insurance companies, undermines important consumer protections, and fails to address the issues that result in out-of-control health care costs.”

Small businesses across rural Maine report seeing their health insurance costs go up more than sixty percent. In Aroostook, Hancock, and Washington counties, insurance premiums have risen more than 60 or 70 percent for some businesses. One company in Presque Isle said they were quoted an increase of 90 percent, according to reports in the Ellsworth American.

Companies in Skowhegan, Bath, Sanford, and Portland have also reported increases in rates of 60 percent or higher because of the age of their employees.

“In a state with the oldest population and where 90 percent of our businesses have less than 20 employees, this is not good policy,” said Treat.

The Republican insurance overhaul allows insurance companies selling individual policies to set rates based on age at up to five times higher than the lowest rate. The law sets no limits on rate changes depending on where you live, or what kind of job you have.

According to Gorman Actuarial, “the health insurance overhaul expands the rating bands for the Individual and Small Group Markets. This allows insurers more flexibility in rating and allows insurers to charge higher rates for older individuals and small groups and lower rates for younger individuals and small groups. In addition, the statute allows insurers to charge higher rates for individuals and small groups located in higher costing areas such as Northern Maine and Down East.”

On page 25 the report states, “11% of groups which include 7% of Small Group members will experience premiums more than 10% higher (average 20%) than what they would have experienced in the absence of PL90. In general, these are groups with higher average ages or groups located in areas of Maine with higher geography rating factors. (Down East, North, and North Central)”

When the law was debated in the Legislature, Democrats cited a 2007 report from the Bureau of Insurance showing that some of the proposed changes may result in rate increases of 20 percent in rural Maine and Down East.

“Now, we see the reality may be even worse than our initial estimates,” said Senator Joseph Brannigan. “We are seeing health insurance spikes across the state. We are hearing complaints from businesses and people from York to Aroostook.”

About 9 percent of companies saw an actual decrease in premiums this year than last. At the same time, however, a slightly larger number of companies also saw hefty increases of 60 percent or 80 percent.

“The law effectively pits the young against the old, urban Maine versus rural Maine, and the healthy versus the sick,” said Brannigan. “That’s not the Maine way.”

Governor LePage insisted on May 29, 2011 that, “LD 1333…will not increase premiums on older people.”
The report shows that clearly has not been the case.

The report finds that there are serious conflicts of interest where the insurance companies stand to gain. The bill sponsored by Representative Treat received a B, scoring 80 points, and the proposal by the Advisory Committee received an F, scoring 0 points. The proposals were graded based on their inclusion of six criteria centered on anti-conflict of interest measures.

Insurance companies have spent large amounts of money lobbying to influence the implementation of the exchange. In the first quarter of 2011 alone, Anthem Blue Cross Blue Shield spent close to $38,000 on lobbying dollars in Maine. This comes after the $35,000 they spent in Maine in 2010. Aetna follows closely behind with a reported $30,000 spent in 2011, and $16,000 in 2010.

The report highlights serious potential for insurance companies to take advantage of a lack of conflict of interest provisions as well as the lobbying dollars they have spent on the process so far.

One of the main components of the Affordable Care Act is that each state set up its own exchange system, or marketplace, for people to buy insurance. This new system is intended to make purchasing insurance in the individual market easier and more affordable.

“Ironically, the Gorman Actuarial report points out that the Affordable Care Act (ACA) passed by Congress in 2010, not PL90, will provide real savings for consumers in the long run,” said CAHC Policy Director Mitchell Stein. “It is vitally important that the LePage Administration and Legislators do everything they can to maximize the potential benefits of the ACA for Maine people and businesses now. At a time when Maine people and businesses are struggling, we can ill-afford ideologically driven policy prescriptions. Ignoring credible information and fact-based analysis is akin to giving every patient the same treatment regardless his or her condition.”