Maine Insights Newsmagazine

Graph depicting Maine’s hospital obligations.The state of Maine has been steadily and increasingly paying down hospital debt for the past decade. From fiscal year 2005-2010, the combined state and federal settlement payments to hospitals totaled $742 million, according to the nonpartisan Office of Fiscal and Program Review.

By Ramona du Houx

January 15, 2013
Graph depicting Maine’s hospital obligations.The state of Maine has been steadily and increasingly paying down hospital debt for the past decade. From fiscal year 2005-2010, the combined state and federal settlement payments to hospitals totaled $742 million, according to the nonpartisan Office of Fiscal and Program Review.

Governor Paul LePage said he has submitted emergency legislation that will authorize the state to issue a a revenue bond for the state’s liquor contract to pay the state’s hospital debt. According to LePage paying off the hospital debt will trigger $298 million in federal Medicaid reimbursements to Maine’s medical centers. So the state would have to repay a bond instead of continuing on an established course that has been steadily paying down the hospital debt.

If lawmakers approve the scheme thus paying the ransom LePage said he’d release the hostage: voter-authorized bonds that he has so far refused to release, including $5.1.5 million for transportation infrastructure improvements and $53.5 million for conservation, clean-water improvements and higher-education construction projects.

After reviewing the governor’s sketchy proposal Democratic leaders questioned the scheme to borrow money to repay hospital debt using the state’s liquor contract.

“Any new revenue from the liquor contract must be considered in the context of the budget the Governor released last week,” said House Speaker Mark Eves. “The hospitals debt is one of the many competing obligations we have. Our top priority must be to strengthen the economy and rebuild our middle class — not shift costs to Maine people and small businesses.”

Last week, Governor Paul LePage issued his two year budget that would eliminate state funds for programs that help the elderly pay for medicine, gut property tax relief, and cut state funding to cities and towns, hurting thousands of Maine families and stifling the state’s weak economy.

The state of Maine has been steadily and increasingly paying down hospital debt for the past decade. From fiscal year 2005-2010, the combined state and federal settlement payments to hospitals totaled $742 million, according to the nonpartisan Office of Fiscal and Program Review.

Under the LePage Administration, in fiscal year 2011-2013, hospitals will recoup $274.9 million in state and federal dollars.

In 2009, the Legislature changed the way hospital payments were made to a “pay as you go” system to prevent the debt accrual. The change was fully implemented in 2010.

“We have to continue paying our hospitals but the numbers put forth by the Governor do not add up. There are serious concerns about borrowing money to pay off our hospital debt,” said Maine Senate President Justin Alfond. “Asking Wall Street to pay our hospitals only leaves us in debt to Wall Street.”

Democrats said they still had many questions about the Governor’s proposal around the liquor contract negotiations. The liquor industry in Maine is $135 million business with the total value of the contract estimated at between $300 — $400 million.

Alfond added, “Frankly this is an opportunity for the state to negotiate a better deal–one where we bring more revenue in to the state, pay our bills and maintain good government.”