Plan to pay Maine’s hospital debt, reform hospital billing, and cover all Mainers

BY RAMONA DU HOUX

March 26th, 2013 

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Senate Majority Leader Seth Goodall’s proposal for the state’s liquor contract would pay Maine’s hospitals in full this year, without the need for the state to go into debt by issuing $100 million nonvoter-approved bonds as Governor LePage’s plan prescribes. The Democrats’ Hospital Repayment and Reform plan also includes needed reforms to help prevent hospitals from overcharging and provides a pathway for sustainable health care.

“This plan is Constitutional; it pays the hospital in full by a date-certain, and it doesn’t borrow money to pay for debt,” said Goodall. “We must put this debt behind us so that we can work together with the hospitals on reform focused on improving and lowering the cost of health care for our citizens.”

LePage’s plan does not commit to paying the hospitals by a certain deadline and carries with it a number of Constitutional and procedural questions.

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The upfront repayment funds in Goodall’s plan would come directly from the winning bidder to the state’s $400 million liquor business. The state’s share of the $484 million hospital debt is $186 million. By paying the non-profit hospitals by no later than September 30, 2013, immediate federal match dollars amounting to $298 million would be triggered. Additionally, since the plan pays off the hospitals before October 1, 2013, the state would save $5 million, bringing the total amount due and paid to the hospitals from $186 million to $181 million.

During the committee hearing of the bill, Senator Patrick Flood, who is the sponsor of the Governor’s bill, acknowledged that any plan that pays off the hospitals without borrowing would be preferred.

“It’s important to remember that this issue is not just about debt, it’s also about high health care costs. And any plan to pay off debt to the hospitals should also address the cost drivers and reforming our system,” said Senate President Justin Alfond.

The plan would increase transparency in medical billing by tying payments from the state to positive health outcomes.

Most patients can’t decipher much of their hospital “costs” listed on their bills, an in-depth TIME magazine report explains how hospitals arbitrarily increase costs. One example the article gave was of a patient diagnosed with lung cancer who was charged $77 for a box of gauze, which retails for $12.95.

“Not only will we ask for the hospitals to account for the spending of the money that we repay to them through this final debt payment. Going forward, we need to understand exactly what we’re paying for and why,” said Speaker of the House Mark Eves.

The final component to the Democratic plan would be to accept federal funding to expand access to health care under the Affordable Care Act (ACA).

“Accepting these funds is a bargain Maine cannot afford to pass up,” said Maine Center for Economic Policy Executive Director Garrett Martin. “The federal government will pay 100 percent of the cost for covering all newly-eligible people for the first three years. After that, the state’s share would still be considerably smaller than under the current MaineCare program. In fact, Maine is one of eight states expected to save money by taking advantage of this opportunity… If we don’t take the money, Maine taxpayers will wind up subsidizing health coverage for residents in states that do.”

According to the new report “Federal Health Care Funding Makes Dollars and Sense for Maine,” accepting federal funds under the ACA will create jobs, boost Maine’s economy, and provide health coverage to thousands of people in Maine. Access to health care for up to 69,000 Maine people through Medicaid expansion would happen with the ACA. And the state would save $690 million over the next decade according to both the conservative Heritage Foundation and the nonpartisan Kaiser Family Foundation.

Maine hospitals would also realize savings from the reduction of charity and preventable emergency care.

Since LePage came into office, his administration has cut health care for thousands of citizens, yet costs continue to rise. According to a February 2013 report in the Boston Globe, 44,000 Maine people will be denied health care, including veterans, the elderly, and people with disabilities, if the ACA is not implemented.

“What’s at stake is a family doctor for every family,” said Eves. “Other states around the country, including states with Republican governors, have put politics aside to do what’s right for their people.”

Maine could implement the ACA with more ease than other states because of the foundation the Dirigo Health Reform Act laid. Health care outcomes were steadily improving with the 2003 law. In 2003, Maine ranked 16th healthiest among the states; in 2009 Maine was 8th. In 2003, Maine ranked 19th among the states in covering the uninsured; in 2009 Maine ranked 6th. Maine used tobacco settlement funds to create ways that enabled its citizens to become healthier and established an efficient public health system, with eight districts, that covers the entire state through Healthy Maine Partnerships. Maine ranks higher for determinants than for outcomes because of these measures. Hospitals improved care under quality provisions in Dirigo. More than 34,000 Mainers got health insurance for the first time. DirigoChoice enrolled about 15,000, and 583 small companies used the health insurance arm of the health care act.

Maine dropped in its ranking from the 8th healthiest state in 2009 to 10th in 2011. Because of LePage administration policies and a Republican-backed insurance law, more people have joined the uninsured ranks. This year the Kaiser Family Foundation estimates that 10 percent (127,000) of Maine’s population is uninsured.

LePage has politicized the hospital debt when he declared that he would not sign any bills unless he gets his way with his complicated scheme. He wants the state to take out a bond debt — while holding back voter-approved bonds that could put people back to work immediately — to pay for the hospital debt and to build a new correctional facility.

“The governor has essentially given the legislature and the people of Maine a ransom note — ‘pass my liquor bill and I will release the bonds,’” said Goodall.

Governor John E. Baldacci inherited 11 years of unpaid hospital debts on his first day in office.

“We found a serious debt and while I was in office we paid over $2.5 billion towards that debt, even during the worst recession since the Great Depression,” said Baldacci. “And we changed the way Maine pays hospitals to a ‘pay as you go system’ to prevent the cycle of debt happening again.”

Over $3.7 billion has been paid from state and federal funding towards the hospital debt since 2003.

Instead of taking the time to analyze the new proposal, LePage criticized it saying it was “shoddily put together,” rushed, and didn’t make sense to him. “They’re looking for a sugar daddy to give them $200 million and then work for nothing for 10 years, and I don’t think that’s going to work,” said LePage on WGME’s Good Day Maine.

LePage repeated his pledge to veto all bills that come to his desk from the Legislature until his hospital payment deal is approved but then signed a bill extending liquor sales for Saint Patrick’s Day.

In a press release, LePage said, “Their plan is yet another tactic designed to distract attention from the real issue. Our hospitals need to be paid, and our state deserves to recapture millions of dollars from a better liquor contract. Anything else is just political posturing.”

“This isn’t about one party or one campaign; it’s about getting it right and doing our job,” said Goodall. “This opportunity comes around once every 10 years, and we must get the liquor contract right so that we can make investments in our future.”

Before Baldacci, the state had mismanaged the liquor business. On day one, he faced a $1.3 billion state structural debt. He leased the state liquor contract to a private company and saved the state $270 million dollars over 10 years.

“The company doubled the sales, distribution, and agents so that 10 years later the liquor contract’s value has increased,” said Baldacci.

As for the LePage veto threat, if lawmakers approve a bill by a two-thirds majority vote in the House and Senate, the measure doesn’t need his signature.