The clock is ticking on the first regular session of the 126th Legislature, and we have yet to act on one of the most important issues before us: paying the $484 million the state owes to Maine hospitals. A bill that would pay the hospitals the money they are owed has been in front of the legislature since January. We now have a little more than a month left before adjournment, and the bill remains tied up in committee.
The latest snag is a last-minute demand by legislative leadership to make the federal expansion of Medicaid in Maine a condition of paying the hospitals. Attaching these two proposals is not only inappropriate, it is impractical at this late juncture.
While the legislative games continue in Augusta, hospitals are struggling to cope without the millions of dollars they are owed. All over Maine, the same scenario is playing out at hospitals. Projects are on hold, workers are being laid off and positions are going unfilled.
Mercy Hospital in Portland, for example, is owed $24 million. They recently had to borrow $15 million just to keep basic services running. Because of the state’s failure to pay its bills, they will now have to pay the interest on that loan. Maine Medical Center is owed nearly $68 million and is currently operating at a $13.4 million loss.
Governor Paul LePage has put forth a responsible plan to pay our hospital bill, which accumulated over years as the state continually gave the hospitals “IOUs” for treating Medicaid patients. The plan calls for issuing a $186 million revenue bond that would be funded through future liquor sales. The payment to hospitals would trigger $298 million in federal matching funds.
The Governor has also committed to releasing $105 million in voter approved general obligation bonds for transportation, conservation, and other projects. He is also supporting a $100 million government facilities bond to replace the Maine Correctional Center in Windham.
The hospital payment and bond packages would inject about $700 million into Maine’s economy, creating new jobs in health care, construction and other areas. Those new paychecks going out would, in turn, lead to increased consumer activity in Maine.
The revenue bond approach makes great fiscal sense for Maine. It would allow us to borrow at a very low rate (probably 3-4 percent). The debt from a revenue bond would not be reflected on the state’s books, which would protect our credit rating.
Now is the time to take advantage of the federal matching rate for the hospital repayment. Back in 2010, the rate for Medicaid reimbursements was 75 cents on the dollar. Today it’s 63 cents. It is very likely that the longer we wait to pay the hospitals, the less we’ll get in the form of matching funds from the federal government.
It’s also the right thing to do. We have a moral obligation to pay Maine hospitals the money they are owed.
It is time to stop stalling and get this important bill in front of the Legislature for a vote.
Senator Gary Plummer (R-Cumberland) represents Maine Senate District 12 which includes the Cumberland County towns of Casco, Frye Island, Raymond, Standish, and Windham as well as the York County town of Hollis.