Plan tackles Maine’s hospital debt

Budget proposal could avert crisis in state Medicaid

The debt led to the loss of 600 hospital jobs in Maine, Governor Paul LePage said. The debt led to the loss of 600 hospital jobs in Maine, Governor Paul LePage said.
By Glenn Adams
Associated Press / January 13, 2011

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AUGUSTA, Maine — Health and medical services for 300,000 Maine residents would be preserved and the state would pay down a major portion of its debt to hospitals if a budget revision unveiled yesterday by Governor Paul LePage is approved by the Legislature.

“It’s a fiscally responsible budget’’ with no “gimmicks or tricks,’’ LePage said at a State House press conference.

Besides solving cash flow problems that have cost hundreds of jobs in Maine hospitals, it avoids a potential insolvency crisis in MaineCare, LePage said. In addition, the spending package for the fiscal year ending June 30 conforms the state tax code with the federal law in several areas.

Through a state appropriation of nearly $70 million, Maine will be able to obtain enough federal matching money to reduce a nearly $400 million debt owed to hospitals for Medicaid services by $248 million.

“While we’re not paying all of it, we’re paying as much as we can afford to pay right now, and I believe it’s a good start,’’ said LePage, who campaigned on a promise to reduce the hospital debt. The governor said financial uncertainty created by the debt caused a loss of 600 hospital jobs, and he hopes they can be restored through his budget provision.

Bruce Sandstrom, chief financial officer for Aroostook Medical Center in Presque Isle, said the $248 million payback proposal represents “an extraordinary accomplishment.’’

“This will definitely help to put hospitals in the strongest position they’ve been in in quite some time,’’ Sandstrom said.

In addition, the budget accounts for increased enrollment in MaineCare, the state’s Medicaid program, and draws sufficient federal funding to sustain payments to 4,000 providers who offer services to 300,000 MaineCare recipients, the governor said.

While the budget itself does not eliminate jobs, it identifies 250 state positions that have been vacant for at least a year, so cuts can be considered in the next budget, said Sawin Millett, LePage’s designee for finance commissioner.

The budget calls for federal-state tax conformity in several areas. The changes are needed because Maine income tax forms were printed before Congress extended some tax cuts in December. Without the changes, Maine tax forms would have to be reprinted. Conformity will cost the state $4.5 million in taxes paid, LePage said.

The budget will need Democratic votes in the Republican-majority Legislature, and both parties expressed willingness to work together to pass it. It seeks to add $151 million to the current $5.5 billion, two-year budget.

Money to pay for the changes comes from improving tax revenues, savings initiatives, and spending curtailments.

House minority leader Emily Cain, a Democrat from Orono, called it “a typical supplemental budget’’ that addresses technical matters and keeps the budget in balance without big policy changes.

Cain, who chaired the budget-reviewing Appropriations Committee during the Alast session, played down the hospital debt repayment proposal, noting that past budgets also have provided for repayments but at a slower pace.