State Medicaid Shortfall at $65M

AUGUSTA — The economic recession and initiatives that haven’t produced the savings hoped for are the culprits behind a $65-million general fund budget overage, the state’s human services chief told the Appropriations Committee Monday.

Brenda Harvey, commissioner of the Department of Health and Human Services, said she has seen the problem building for months in various Medicaid accounts, but didn’t know the full extent of it until recently. When combined with federal matching funds, the accounts are over budget by about $235 million.

Department of Administrative and Financial Services Commissioner Ryan Low said many other states are experiencing similar problems that haven’t yet come to light because their budgeting processes unfold later than Maine’s.

“What we’re seeing in Maine is not any different, in fact, it’s exactly the same as what’s going on across the country,” said Low. “We have been trying to pin down this number for as long as we could, but things have been changing rapidly.”

Republicans reacted with fury Friday when Low announced the problem during a presentation to the Appropriations Committee, alleging that Governor John Baldacci hid it until after his March 10 State of the State address. Harvey, Low and Baldacci’s deputy chief of staff rejected that notion, saying that the timing was a factor of when the information became clear and a busy schedule for Low and the Appropriations Committee last week.

Though their tone softened Monday, Republicans repeated their concerns.

“The Governor delivered his State of the State address and didn’t even mention this,” said Sen. Jonathan Courtney (R-York County), the assistant Senate minority leader. “I think maybe we can do a better job of communication around here.”

Sen. Peter Mills (R-Somerset County), the ranking Senate Republican on the Health and Human Services Committee, who blasted Baldacci on Friday, said Monday he still believed “the news was being managed” by the administration.

Rep. Robert Nutting (R-Oakland), a member of Appropriations, agreed. “It’s outrageous that we didn’t hear about this (before the speech),” he said.

But Sen. Richard Rosen (R-Hancock and Penobscot counties) and Rep. Sawin Millett (R-Waterford), both members of Appropriations, conceded that Low could have provided the information earlier had he been asked to by the committee.

“Ryan goes out of his way to communicate with us on a regular basis,” said Millett.

Harvey gave the committee a rundown of what has caused the $65-million problem:

  • Measures put into place in December and January to control overspending on programs for adults with mental disabilities have yet to show the savings that were anticipated, though Harvey believes the savings will materialize over time.
  • Expenditures on residential services for the elderly and people with mental illness have increased because of lower-than-expected vacancy rates.
  • Transportation costs have increased in a range of programs.
  • Physician and other health care practitioner utilization is rising.
  • Out-of-state hospital costs are higher than expected.
  • The need for children’s mental health services is rising.
  • Changes to the mental health services budget fell $9 million short of goals and the shortfall could not be absorbed in other lines.
  • A delay in implementing multistate contracting for durable medical equipment will cost more than expected.

Baldacci proposes using Medicaid stimulus funding to cover the shortfall, but that will have to be approved by the Legislature along with the rest of the biennial budget currently under review.

Nicole Ouellette

Nicole Ouellette

When Nicole isn't giving advice she's completely unqualified to give, she runs an Internet marketing company in Bar Harbor, where she lives with her husband Derrick and their short dog Gidget. She loves young adult novels, cooking and talking French to anyone who'll talk back. [email protected]