Report from the States

As the Nation Goes, So Goes Maine? Elizabeth Kilbreth University of Southern Maine

Abstract Historically, Maine has been a state with generous safety net programs and a track record of innovative efforts in health system reform, developed under the leadership of Democratic administrations and with frequent support from moderate Republicans. But the 2010 elections in Maine dramatically changed the political balance of power, anointing both a govemor and a legislature ideologically at odds with the state's recent political past. Maine has become a bastion of resistance to the Patient Protection and Affordable Care Act, with a reduced Medicaid program, defunded state access initiative, and no state exchange. In addition, the state has adopted a laissez-faire approach to insurance market dysfunction. Using Maine as a case study of the shifts in national political mood, this article describes in broad brushstrokes Maine's history of health reform efforts and recent shift in political direction, and discusses some of the factors that contributed to the change.

Over the past four years, Maine has changed from a state with generous safety net programs and a track record of innovative efforts in health system reform to a bastion of resistance to the Patient Protection and Affordable Care Act (ACA), with a reduced Medicaid program and a laissez-faire approach to insurance market dysfunction. In many ways, the reversals in Maine can be seen as a microcosm of the shifts in national political mood. The 2010 elections in Maine dramatically changed the political balance of power, anointing both a govemor and a legislature ideologically at odds with the state's recent political past. The governor's race had a crowded field—three independent candidates in addition to a Democrat and a Republican. The splintering of votes allowed the Republican winner to claim his seat with less than 40 percent of the votes cast. In the legislature, the Journal of Health Politics, Policy and Law, Vol. 39, No. 3, June 2014 DOI 10.1215/03616878-2682743 © 2014 by Duke University Press


Journal of Health Politics, Policy and Law

Democrats lost control of both the Senate and the House, giving the Republicans bicameral control for the first time in more than forty years. Historically, Maine Republicans have been old-school moderates, as exemplified by its senators in Washington—fiscally conservative but socially liberal. The new Republican governor and majority in the legislature reflect the national shift of Republicans toward a far-right ideology and a take-no-prisoners style of politics. The govemor ran on a politically appealing story of personal fortitude—he started life as a mnaway child from an abusive home and became a successful businessman and mayor of one of Maine's larger cities. Once in office, his aura of toughness and pragmatism gave way to a less-appealing nastiness. He famously told the Maine NAACP that it could "kiss his butt" when the organization complained about his lack of participation in an event honoring Martin Luther King (Miller 2011). Coming into office on the heels of the economic recession and facing a fiscal crisis, the govemor and legislative majority successfully fought for income tax cuts that necessitated reduction in state funding of K-12 education and increases in property taxes (Martin and Johnson 2012). Subsequent to that victory, the govemor and legislative Republicans have pursued an agenda of program cuts that has seriously altered Maine's prior health policy architecture. This brief case study describes in broad brushstrokes Maine's history of health reform efforts and recent shift in political direction, and discusses some of the factors that contributed to the change. Access to Care Maine is a less wealthy state than its New England neighbors, but, despite the strain on the state budget, for many years it evinced a determination to maintain a strong health safety net for its most vulnerable residents. The state established relatively generous income eligibility criteria for Medicaid and adopted each new optional eligibility group as federal mies changed over the years. As the costs of health care and insurance premiums rose, many legislators felt that more needed to be done. In 1989 the state enacted a comprehensive reform strategy that included a state-funded Medicaid expansion to low-income Mainers and increases in provider Medicaid reimbursement rates. The program was short-lived, as a major economic recession in the early 1990s caused a sharp dip in state revenues. In the ensuing retrenchment, adult eligibility to the Maine Health Access Program was first frozen, then phased out. Federal Medicaid eligibility

Kilbreth • Report from the States


standards for children, in the meantime, caught up to Maine's, allowing enrolled children to be transferred to Medicaid. In 2003 the state again undertook an ambitious reform effort that included expanded access and strategies to contain costs and improve quality. After intense negotiations involving key stakeholder groups and compromise on cost-containment and program-funding strategies, the reform package received bipartisan support, winning a two-thirds vote in each legislative house. In many ways a precursor to the ACA, Maine's reform was centered on offering sliding-scale subsidies of private insurance for the self-employed and low-income workers in small businesses. The Dirigo Insurance Program was administered by a new government agency that negotiated coverage terms with the insurer, handled enrollment and subsidies, and provided Web-based information to prospective purchasers on plan options and consumer costs, once subsidies are taken into account. The 2003 reform also used Dirigo program funds to expand eligibility under Maine's CHIP program, to the parents of eligible children. Between 2005 when all these access initiatives were fully operational and the state elections in 2010, over thirty thousand individuals received coverage. By 2007 Maine's uninsurance rate had dropped 20 percentage points from the 2005 level (Martin and Rooks 2009). The changing of the political guard in Maine coincided with the passage of the ACA. With the expectation of an expanded federal role in regulating insurance markets, subsidizing premium costs, and expanding the Medicaid Program, the Dirigo program faced, at a minimum, major transformation. It might have become a "public option" health plan competing on a state insurance exchange. The Dirigo funds could have been used to supplement federal subsidies on the exchange. The administrative infrastmcture developed by the Dirigo Health Agency might have served as a platform to launch the development of a state-mn insurance exchange. However, Maine's new govemor opted for a strategy of maximum obstmction to the implementation of the ACA. Maine joined the states who sued to try to overtum the law. With support from Republicans in the legislature, the govemor stopped development of a state health exchange. Farly in 2012, the legislature's Insurance and Financial Services Committee halted consideration of competing Democratic and Republican bills on the stmcture of the state exchange, choosing to await the outcome of the court challenge to the ACA. A $6 million federal development grant was retumed to Washington (Farwell 2012b). After the court mling on the ACA and as the deadline for state decisions on exchanges approached. Governor Paul LePage, without consulting the legislature, sent a letter to


Journal of Health Politics, Policy and Law

Secretary of Health and Human Services Kathleen Sebelius announcing that the state would not develop its own exchange. The governor stated to the press, "I'm not lifting afinger.We're not going to get involved... We're going to let Mr. Obama do a federal exchange. It's his bill" (Farwell 2012a). The resistance from the governor and his allies to the ACA strategy for universal coverage extended to opposition to the Medicaid component, as well. The governor's first salvo came in December 2011, when he proposed cutting sixty-five thousand people from MaineCare—Maine's Medicaid program. Programs proposed for elimination included childless adults (nineteen thousand), parents of children covered through the state's CHIP program with incomes above poverty (twenty-one thousand), low-income nineteen- and twenty-year-olds, and low-income, dual-eligible seniors with a Medicaid wrap-around to their Medicare coverage. These cuts were delayed by a challenge from the Obama administration, which initially saw the proposed cuts as "inconsistent" with the ACA (Mistier 2012). The law contains a provision requiring states to continue to cover all those it covered prior to the federal reform (Kaiser Family Foundation 2012). In January 2013 the Centers for Medicare and Medicaid Services (CMS) approved some, but not all, of the proposed cuts, resulting in a loss of coverage to an estimated twenty thousand individuals (Bouchard 2013). In 2013 Maine's legislature took up the question of whether to adopt the ACA Medicaid expansions, which would be 100 percent federally funded for three years and then phased down to a 90 percent federal match. Analyses showed that the expansion would provide coverage to around seventy thousand Mainers, would add $1.05 billion to Maine's economy, and could result in the creation of fifteen hundred new jobs (Maine Center for Economic Policy 2013). In June legislation approving the expansion passed both houses with large majorities. The governor vetoed the bill, stating his disapproval of "a massive increase in welfare" (Stone 2013). An attempt to override the veto fell a few votes short of the needed twothirds majority. The battle over the Medicaid expansion was intense on both sides of the aisle. One Republican legislator likened accepting federal money for a Medicaid expansion to "checking into the roach motel," while another took the fioor to read the lyrics to Don McLean's "American Pie" as her colleagues rounded up votes (Rooks 2013). On the Democratic side, two legislators, long absent because of illness, made the trek to Augusta to cast their votes supporting the expansion. All told, the LePage administration has taken a significant toll on health coverage among low-income Mainers. About twenty-five thousand lost coverage with the eligibility cuts early in his tenure. Another

Kilbreth • Report from the States


twenty-five thousand lost coverage in January 2014, when the state's noncategorical waiver program and coverage of parents with incomes between 100 percent and 133 percent of poverty expired. The Dirigo Insurance Program, in a phase-down mode since LePage came to office, closed at the end of 2013, resulting in lost coverage for another seventy-five hundred individuals. Finally, almost twenty-five thousand individuals in Maine are estimated to fall into the "gap" group—the low-income population ineligible for subsidies on the exchanges but not covered by Medicaid in states that have refused to enact the Medicaid expansions envisioned as part of the federal reform.

Approach to the Health Care Market, Then and Now Maine has long followed a two-pronged strategy to ensure access— coverage expansions and strategies to hold down health care costs. Maine faces many of the same challenges to an efficient and effective health care system as other mral states—vast stretches of sparsely inhabited territory, undemtilized small rural hospitals, and difficulty keeping providers in rural areas. These endemic cost-drivers are exacerbated by poverty and age (Maine has the oldest population of all the states and below-average household income). A relatively high burden of illness and disability also contributes to costs. For example, Maine has the seventh-highest prevalence of adult asthma among states and the eighth-highest reported disability rate (Kaiser Family Foundation 2010, 2011). In the 1980s Maine was among the first states to tackle the problem of rapidly rising health care costs through a regulatory strategy. Throughout the decade, Maine's Health Care Financing Commission capped hospital revenues, and specified payer discounts for efficiencies (such as rapid payment) and markups for charity care and bad debt. Maine's legislature similarly used insurance regulation to try to ensure broad consumer access in a marginally competitive insurance market. A 1993 law established modified community-rating in Maine's small group and individual insurance markets, mandated guaranteed renewal of policies, and guaranteed issue for individuals with established coverage. Predictably, govemment rule-setting in both the health care delivery system and the insurance market came under persistent attack by those who favored an open market approach—who saw regulation as distorting markets, stifling competition, and driving out technologies and companies that could increase quality and offer greater choice. Hospital rate-setting was abandoned as part of the package of health reforms in 1989. The


Journal of Health Politics, Policy and Law

insurance rating structure, which allowed no more than a 50 percent variance in rates for age and geography, was maintained until the Republican electoral victories in 2010. The new Republican legislature wasted no time in enacting sweeping changes that dramatically increased rating flexibility. Since that time, disparities in premiums between rural and urban areas have grown dramatically. For example, more than 40 percent of small businesses in Maine's northern, rural counties had rate increases of greater than 20 percent—a few as high as 80 percent—in the fourth quarter of 2012. By contrast, in Maine's more urban southern counties, 20 percent of small businesses saw a premium reduction and another 57 percent, an increase of 20 percent or less in the same time period. The net effect of these changes was an accelerated rate of decline in Maine's small group market, wbich shrank in size (number of groups) by 15 percent in 2012 (Maine Bureau of Insurance 2012). There are only three carriers in Maine's small group market. Part of the rationale for loosening restrictions on the market was the hope of drawing young, healthy individuals into the market, attracting new insurers and increasing consumer choice. It may be too early to judge the impact of reduced regulation on insurance market competition in Maine, but ironically, to date, the one change in the marketplace is due to the ACA. A notfor-profit, health care cooperative plan authorized and seed funded under the ACA launched in September, offering coverage on Maine's (federally run) insurance exchange. It is one of only two carriers to enter Maine's exchange and offer coverage to individual buyers.

What's Next? Maine suffers from a chronically weak economy in many parts of the state and was hard hit by the Great Recession of 2008-2009. Frightened and angered by job loss and the perceived inability of public officials to remedy the situation, voters were ready in 2010 to sweep out the old and ring in a new, presumably business-friendly, administration that could deliver jobs. The new governor symbolically staked out his position of probusiness leadership by placing a sign at Maine's border reading "Open for Business" and removing an ostensibly "prolabor" mural with scenes from Maine's history from the state's Department of Labor lobby (Greenhouse 2011). After years of frustration as the minority party, the Republicans in the legislature were not inclined toward bipartisan negotiation and wasted no time in enacting their political vision—from relaxed regulations and reduced taxes benefiting primarily the wealthy to reduced social service programs.

Kilbretb • Report from tbe States


To date, the hoped-for stimulus to the private economy has not materialized. Maine is forty-ninth of the fifty states in job creation since Govemor LePage took office. The state has regained only a quarter of the jobs lost during the recession (compared with an 80 percent recovery rate in Massachusetts and a 60 percent recovery rate in Vermont) (Johnson 2013). There is some evidence that the governor and legislative majority misread their mandate from Maine voters. The public's comfort with more moderate policies is suggested by the fact that the electorate twice, in 2006 and 2009, defeated referenda to impose tax caps on state revenues similar to the Taxpayer Bill of Rights (TABOR) legislation in Colorado. In the midterm legislative elections of 2012, the Democrats took back control of both houses (with an insufficient margin to override a gubernatorial veto). The hard-fought battle over the Medicaid expansion reflects the shift in the balance of power in Augusta and also suggests some slippage of the govemor's disciplined hold on Republican legislators. The Republican minority leader of the Senate cosponsored a compromise bill that would have authorized a Medicaid expansion with a sunset provision triggered by the reduction in federal payments to any level below 100 percent. While this compromise failed to win sufficient Republican support to override the governor's veto, it served as a vehicle for several high-profile Republicans to break ranks with their party and the govemor. The governor himself is showing signs that he feels pressure to modify his position on Medicaid (or, perhaps, to better position himself for his mn for reelection in 2014). A spokesperson for the govemor told the press that the govemor is evaluating the altemative models of Medicaid expansion approved in Arkansas and Iowa and proposed in Pennsylvania (Lawlor 2013). The current administration has also chosen not to obstruct private(nonprofit) sector activities related to ACA development in the state. The new cooperative health plan was licensed and had rate filings approved by the Bureau of Insurance without undue barriers. Indeed, the activities outside the govemment sphere may offer the one positive development in Maine's bleak health policy landscape. The new health plan has been able to develop a strong, statewide network of participating physicians and hospitals. The co-op chose, in its first-year offerings, to maintain narrower rating bands than now allowed under Maine law, increasing access in Maine's poorest counties. Despite the fact that the co-op's commercial competitor on the exchange has used rate variance to minimize premiums for its least comprehensive and lowest cost plans for young subscribers in Maine's choice, urban markets, the co-op's rates are lower than the commercial plan's for all other benefit options and age groups (personal


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communication, October 31, 2013). As an ACA startup cooperative plan, Maine's new not-for-profit is heavily dependent on federal subsidies, and it remains to be seen whether it can remain competitive over time. The electorate will have a chance, once again, in 2014 to choose leaders and set the state's political course for the next few years. The last midterm elections suggest the possibility of a course correction back toward Maine's prior support of progressive social policies. However, Maine's dismal economic recovery presages ongoing state budget constraints that may frustrate policy activists for some time to come.

Elizabeth Kilbreth is associate research professor emeritus at the University of Southern Maine, Muskie School of Public Service. Her research focuses on health system reform, targeting access to care issues. She has served as principal investigator and published findings analyzing political factors conducive to health reform and comparing state access initiatives and program impact. She is serving as a member of the Maine Health Access Foundation Advisory Group on Health Insurance Policy.

References Bouchard, K. 2013. "MaineCare Budget Cuts Loom over Thousands." Portland Press Herald, January 11. Farwell, J. 2012a. "LePage Won't 'Lift a Finger' to Set Up Health Insurance Exchange." Bangor Daily News, November 15. Farwell, J. 2012b. "Maine GOP Delays Health Insurance Exchange until Court Ruling on Obama Plan." Bangor Daily News, March 12. Greenhouse, Steven. 2011. "Mural of Maine's Workers Becomes Political Target." New York Times, March 23. Johnson, J. 2013. "Maine Jobs Still Scarce Four Years after Recession." Maine Center for Economic Policy (blog). July, Kaiser Family Foundation. 2010. "Adult Self-Reported Current Asthma Prevalence Rate." Kaiser Family Foundation. 2011. "Percentage of Population Who Reported a Disability." Kaiser Family Foundation. 2012. "Understanding the Medicaid and CHIP Maintenance of Eligibility Requirements." Kaiser Commission on Medicaid and the Uninsured publication no. 8204-02. http://kaiserfamilyfoundation.files.wordpress .com/2013/0 l/8204-02.pdf.

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Lawlor, J. 2013. "LePage Signals Interest in Medicaid Expansion Compromise." Portland Press Herald, October 20. Maine Bureau of Insurance. 2012. "Small Group Insurance Renewals: Executive Summary." _Dec2012.pdf. Maine Center for Economic Policy. 2013. "Eederal Health Care Eunds Will Boost Local Economies." MECEP position statement, 2428. Martin, G., and J. Johnson, 2012. "The Great Tax Shift: Income Tax Cut Burdens Many Mainers." Bangor Daily News, October 16. Martin, G., and D. Rooks. National Health Reform: Lessons from Maine. Augusta: Maine Center for Economic Policy. Miller, K. 2011. "LePage on NAACP: 'Tell Them to Kiss My Butt."' Bangor Daily News, January 14. Mistier, S. 2012. "Plan to Cut MaineCare at Crossroads." Portland Press Herald, August 2. Rooks, D. 2013. "Medicaid Extension: If Arizona Can Do It, So Can Maine." SunJournal, June 23. Stone, M. 2013. "LePage Vetoes Medicaid Expansion, Says 'Maine Can Do Better."' Bangor Daily News, June 17.

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As the nation goes, so goes Maine?

Historically, Maine has been a state with generous safety net programs and a track record of innovative efforts in health system reform, developed und...
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