Tuesday, January 14, 2014

How soon will Maine’s Medicaid Bubble burst?

Your humble correspondent recently had another item published on The Maine Wire, and you can read it here.  And we hope you do, because we fervently endorse The Maine Wire, and it’s increasingly comprehensive coverage of the news in Maine, and we’re hopeful you will become a regular reader like we are.

As they have in other cases, they edited our submission to be more in line with their publishing sensibilities.  We’re not even sure what that term means, and rather than ponder it, we decided to just give you the raw version of our column.  In particular, we think the visuals are worth the extra space here on our little media outlet.

So, with out further uhdew, here you go:

A Medicaid Bubble - and how to get there

Maine Wire (and Other Side) readers should be well aware that the most controversial policy issue at the State level this year is sure to be Medicaid expansion (or Mainecare, as it's called here in Maine.) In fact, the legislature has scheduled a public hearing for LD 1578 on Wednesday of this week (violating their own rules, we should note.)

Medicaid expansion is not new to Maine; from 2002 to 2012, enrollment increased from 200,000 to 338,000. Compare that to New Hampshire, a state of similar size, where enrollment is 160,000. Maine has the 3rd highest enrollment nationally, at 27%. The New England average is 18%, and the national average is 19%.

Expansion advocates want to enroll another 70,000 in the program, raising our total to nearly one third of the population - 408,000 - more than twice the 2002 level.

Advocates for the expansion claim it will cost virtually nothing to Maine Government, and in fact, can provide savings and economic expansion. (One wonders, of course, if enrolling people "saves money and expands the economy," why we don't just put everyone on Medicaid; think of the boom! We hear similar claims for unemployment benefits; the same conundrum applies.)

This sounds very enticing on its face; especially to those in the 'caring sector.' It also brings to mind recent history - in particular, the 'great recession' and its purported causes. The most frequently cited of those is the "housing bubble," which is still working itself out of our system. Graphically speaking, it looks like this:


The party line explanation for the bubble was that 'predatory lending practices,' perpetrated by the 'big banks' etc, sucked supposedly innocent, unsuspecting borrowers into taking out mortgages they couldn't possibly afford. This was done, it was explained, by offering artificially contrived and highly unrealistic loan terms at the front end that would elapse in just a few years, and leave the borrower with a lasting obligation they were completely unprepared for and unable to afford.  Things like 'sudden increases' in monthly payments due to 'shocking' interest rate increases, 'balloon payments,' and a need to refinance the debt under extremely stressful conditions.


By the time an innocent public came to understand the "fine print," the bubble burst, and a tsunami of foreclosures swept over the country.

We assert this is the political pathology at play in the movement to expand Medicaid. The Feds are promising to pay "100%" of the cost of new enrollees for a three year period. So why not go ahead and blow the bubble up even bigger? At least that's the way innocent and well intentioned legislators are being sucked into supporting programs that neither federal nor state taxpayers can realistically afford. What we have here is 'predatory cost sharing' policy that completely masks the real costs of taking on Medicaid expansion under the guise of good intentions. And plays to the weakness of our entitlement culture and its related professional enablers.

By the time the fine print becomes legible ("we'll have to pass the bill to find out what's in it") and cold reality is at the doorstep, the bubble will have no choice but to burst, and economic and social chaos will reign. Or worse.

If the housing bubble was the cause of the great recession nationally, why are Democrats and their allies in the Entitlement/Non-Profit Industrial Complex working so hard to subject Maine to its own great recession following the same road?

Given the seriousness of this issue and the long term implications for everyone in the state, not just the uninsured, we think it's appropriate to challenge the numerous supporters of the proposed expansion to go on the record in a very public way. And so we propose that this Certificate of Medicaid Expansion Advocacy be completed and made public by each and every advocate.


Affirmation of Support


Medicaid Expansion in Maine

I, (choose one of the following)

( ) Representative (name) of District X in the the 126th Maine Legislature.

( ) Senator (name) of District Y in the 126th Maine Legislature.

( ) (name), (position), (organization) of (city) Maine

do solemnly affirm that I wholeheartedly and unequivocally support the expansion of Maine's Medicaid enrollment by 70,000 as proposed.

I further affirm that I wholeheartedly and unequivocally believe and support the federal promise of 100% funding for three years, and 90% funding in subsequent years, regardless of the fact that we are a permanent, structural debtor nation, and have no existing revenue streams to take on and fund increases in entitlement costs. Accordingly,

I (do) (do not) support printing of federal currency to finance the cost of expansion.  (see figure A below)

I (do) (do not) support borrowing of funds from other nations to finance the cost of expansion.  (see figure B below)

I (do) (do not) support raising federal taxes to finance the cost of expansion.

Additionally, I hereby affirm that

I (will) (will not) vote for increasing Maine taxes to finance the cost of expansion.

I (will) (will not) vote for or support shifting state revenue streams from other obligations to finance the expansion.

I (will) (will not) vote for or support deferring payments to Medicaid/DHHS service providers to free up finances for expansion.






Date: ___________________


This is a serious suggestion and request. Those who are determined to weigh the federal and state economy down with an increasingly unsustainable entitlement burden should be willing to stand up and go on the record with their intentions, including clear delineation of the details of how they would pay for it.

We suggest that this process begin at the hearing on Wednesday, by providing the above form to committee members and those who testify in favor of the proposed expansion. After all, isn't transparency what good government is all about?

Figure A:


Figure B:


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