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$484 Million owed to hospitals by MaineCare

Lewiston hospitals are owed $29 million

By Bruce Poliquin

Around 2002, Maine state government started practicing some odd bookkeeping: it began paying Maine hospitals less than they were owed for services provided to our rapidly growing low-income Medicaid population.

The state simply chose not to pay, for example, the full contracted amount for the ambulance, tests, medication and nurse/doctor care for a Medicaid patient treated at an emergency room. In many cases, the hospitals were not fully paid for several years so Augusta could plug recurring holes in its annual budgets.

Today, Maine’s 39 hospitals are owed $484 million for services they have already provided back to 2009. This ongoing hospital debt is the direct result of our huge and expensive Medicaid program, called MaineCare, which was originally created as a health care safety net for our most vulnerable residents.

Here are the top five hospital bills owed by the state:

Eastern Maine Medical Center, Bangor: $72 million

Maine Medical Center, Portland: $68 million

Central Maine Medical Center, Lewiston: $51 million

MaineGeneral Medical Center, Augusta: $45 million

St. Mary’s Medical Center, Lewiston: $29 million

Last week, I spoke with Laird Covey, president of Central Maine Medical Center in Lewiston, about the $51 million that Augusta owes his hospital. CMMC employs 3,000 fellow Mainers with good-paying jobs and benefits. That’s 3,000 paychecks every two weeks to buy groceries, school supplies, gasoline and heating oil, and to pay the rent or mortgage.

Those paychecks push roughly $270 million into the local economies as purchases ripple through shopping centers, movie theaters, restaurants and dry cleaners—and the workers they employ. CMMC is also one of the largest property tax payers in Lewiston, helping to keep taxes down for city residents.

Because CMMC has not received the $51 million it is owed by the state dating back to 2009, Mr. Covey’s concerns echoed those shared with me by other Maine hospital executives. There have been layoffs, delayed salary increases, deferrals of new construction and postponements of equipment updates. This nagging hospital debt negatively impacts the 30,000 workers (and their families) employed statewide by Maine’s 39 hospitals, as well as the local economies that benefit from those 30,000 paychecks every two weeks.

Part of the sad irony of this behemoth $484 million hospital debt is that the Maine Constitution is written to instill fiscal discipline in state government. It requires our state officials to equal outgoing expenditures with incoming tax revenues, every year. Legally requiring an annual balanced budget prevents Augusta from living beyond its means and racking up a mountain of smothering debt like Washington has—or so we thought.

What can state government do to fix this mess that hurts tens of thousands of Maine families?

First, it would be helpful if our state legislators finally recognize that overspending on our huge Medicaid program is the root cause of many problems. MaineCare currently enrolls approximately 350,000 of our citizens (27 percent of our entire population), up from 200,000 just 10 years ago. It consumes 21 percent of all state tax revenues and is crowding out the funding for other essential services like road and bridge repair.

Unlike in most other states, childless adults and able-bodied 19- and 20-year-olds qualify for MaineCare. Services provided in Maine—but not required by the federal government—include chiropractic, dental, occupational and physical therapy and podiatry care. Some of our most vulnerable families do not receive badly needed health care because the MaineCare dollars are spread so thin among so many citizens, including middle-income households.

Second, our state Legislature should act upon a unique opportunity to pay back the $484 million owed to our hospitals. Maine is one of roughly 19 states that controls the sale and distribution of liquor within its borders. Liquor sales in Maine approximate $50 million per year. In 2004, our state government sold the rights to those revenues and any resulting profits to a private company in Massachusetts for $125 million upfront to help plug—you guessed it—a budget hole. That contract expires on June 30, 2014.

Governor LePage has recently asked the Legislature to pass a new law allowing the state to borrow $177 million by selling “liquor revenue bonds” to investors. The profits from the sale of liquor would pay the annual interest and principal back on the loans from the bondholders. With this $177 million in the hands of Maine state government, Washington will contribute $307 million to the pot. The total $484 million can then be used to pay off the entire hospital debt.

I hope that our elected officials put politics aside, work together and use the forthcoming liquor revenues to pay our 39 hospitals the hundreds of millions of dollars they are owed. There’s no better way to demonstrate to the deserving people of Maine that state government can be counted on to do what is right.

Bruce Poliquin is the former Maine state treasurer and a Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the state about the important issues facing Maine families and their jobs.

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One Response to “$484 Million owed to hospitals by MaineCare”

  • Dan:

    Strange thing is when Governor Lepage came into office, the state owed about $250 million to the hospitals, and the governor used stimulus money to pay that off. In the interim, he failed to pay hospitals $450 million, all while giving the wealthy a huge tax cut. Now the state is in worse position that it was, so rescind the tax cut and we’d have more than enough to pay the hospitals.

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