Medicaid costs in Maine have grown by $260 million annually for the last three years – a rate taxpayers can’t sustain, members of a special legislative committee agreed last week as they started their work to recommend changes to the system.

“If left unchecked and un-redesigned,” the state’s Medicaid program could outstrip “the capacity of the state taxpayer” to pay for it, Mike Hall, the deputy commission of the Department of Health and Human Services, told the group.

The committee, in some ways, is mirroring work already in progress at the national level by a bi-partisan commission on Medicaid reform co-chaired by former Gov. Angus King. That commission last month recommended $11 billion in savings with the real work of reforming the system just starting.

“In reality it’s $11 billion in Medicaid savings. It’s not going to affect the recipients,” in terms of cutting people off the rolls or cutting benefits, King said. “The harder part starts now.”

Hard or not, everyone seems to agree there’s no avoiding the need to make changes in the Medicaid system, which essentially provides health coverage for the poor. It is starting to surpass public education in terms of consuming tax dollars.

The program’s growth in Maine of $260 million annually since fiscal year 2002, includes both state funds and matching federal dollars that come in at a rate of 2-to-1. The entire Medicaid budget in Maine is now more than $2 billion.

“It’s unsustainable, either from the federal point of view or from the state’s point of view,” King said.

The state committee, which had its first meeting last Tuesday and will meet three more times before making recommendations in December, was created by a bill introduced by Rep. Darlene Curley, R-Scarborough, a member of the Appropriations Committee and a registered nurse, who once ran her own home healthcare business.

Curley asked for a projection of costs five and 10 years down the road, “if we do nothing.” She also asked, “how much have we exceeded what we need to do?” in terms of programs required under federal law.

“Which are mandated and which are optional?” Curley asked. “I don’t mean to bring it down to such a basic level,” she said, but “we need to understand the baseline.”

According to information provided by the governor’s Office of Health Policy and Finance, Maine is on par with 22 other states in terms of the coverage it provides for children, but surpasses the national averages for adults. Overall, Maine is one of nine states and the District of Columbia that covers more than 40 percent of its low-income population, defined as those making up to twice the poverty level.

Sen. Michael Brennan, D-Cumberland, co-chair of the special committee, said up until now the Legislature has not thoughtfully planned its approach to covering poor people, but cut Medicaid in order to make a budget.

“Things that are called program redesigns…there’s nothing innovative about them,” he said. They are just budget cuts.

He asked the Department of Health and Human Services and the governor’s office to work with his committee.

“I hope you will be bold enough to make some recommendations,” he said, so “in February, when we’re in the middle of a budget discussion,” the Legislature won’t be making program changes just “to close the hole.”

Sen. Richard Nass, R-York, asked whether the administration would be willing to cut the array of benefits offered to recipients in return for covering more people. “If your resources are limited…is that an area you’re willing to go?”

A case in point is a non-mandated program Maine has for adults without children at or below the federal poverty of $9,300 in income annually. It grew so rapidly that new enrollment had to be shut off. More than 7,000 people have dropped out of the program since March 1 – due to fluctuating incomes or failing to fill out proper paperwork – and now can’t get back in. Thousands are on the waiting list. DHHS is cutting benefits to those remaining to allow more to enroll, but those benefit “redesigns,” as they are called, are now being protested by advocates for the poor.

National perspective

Former Gov. King, who is being invited to talk about his commission’s work before the special state committee next month, said government has no choice but to address the problem.

“You have to start with the premise that this program is unsustainable,” King said.

According to his commission’s report, Medicaid spending nationally is predicted to grow from $275 billion in 2003 to $685 billion in 2015.

“This is a gigantic system. It’s grown up herky-jerky over 40 years, without being analyzed from a system’s perspective,” he added.

The $11 billion in savings already proposed – and hung up in Congress since Hurricane Katrina hit – deal with things like charging co-pays if patients want more expensive drugs not on the government’s recommended list. That’s something Maine already does. The commission also recommended making it tougher for the elderly to transfer or hide their assets so they can qualify for nursing home coverage. Under the proposal, the government could look back 60 months to review asset transfers, versus the current 36-month look-back period.

While a similar plan raised eyebrows earlier this year in Maine, King said, “I’d be surprised if somebody comes forward and says, ‘I should be able to manipulate the system.'”

As for the commission’s future work that starts at the end of this month, King said he didn’t want to speculate, but pointed out some statistics that show where the bulk of Medicaid money is going.

On the national level, 22 percent of Medicaid recipients are elderly and disabled, but their care consumes 75 percent of Medicaid dollars. In Maine, the elderly and disabled make up 26 percent of the Medicaid population and account for 62 percent of the spending.

“I question whether when Lyndon Johnson signed the Medicaid law anybody understood or had the intention that Medicaid would become the nursing home payer of last resort,” King said.

King, who got put on the commission because as governor he got to know then Gov. Michael Leavitt of Utah, now head of the federal DHHS, said the underlying problem with Medicaid is healthcare costs.

“We’ve turned the consumer driven system, which leads to reasonably priced phone bills and automobiles, absolutely on its head,” he said. “There’s no information about price…and most of us are insured and our employers are paying the premium, so we’re immune to it,” he said. “Until people participate in the decisions financially, they’re not going to take the cost seriously.”

He also would like to see healthy people get a break on their insurance rates.

“We’re so afraid of violating the social insurance principle, there’s no advantage to people being healthy,” King said. “Why should people who decide not to smoke pay the same as the people who do smoke? We’ve taken the personal responsibility piece from all this.”