How court ruling impacts Maine Medicaid expansion plans

A judge has ordered Maine Gov. Paul LePage to begin implementation of voter-approved Medicaid expansion after missing an April 3 deadline.

A ruling issued Monday by Maine Superior Court Judge Michaela Murphy said that the state’s Department of Health and Human Services failed in its duties to file a plan expanding Medicaid after voters approved a ballot measure last November. She ordered the state to file a plan by June 11.

LePage blocked efforts to expand Medicaid even after 59% of Maine voters approved the proposal in November. The expansion is expected to increase Maine’s Medicaid enrollee population by about 70,000, which the Republican governor has argued will severely harm the state’s budget.

The expansion "would likely have somewhat minimal near-term impact on the state's credit quality," S&P Global Ratings said in a credit comment Wednesday after the judge's ruling.

LePage could not be reached for comment on the ruling.

The Republican governor said the plan petitioners are seeking would force the state to spend “tens of millions of dollars” in unappropriated funds during the next fiscal year and cost “hundreds of millions of dollars” over the course of the next two multi-year budget periods. He also has balked at a plan floated by Attorney General Janet Mills, a Democrat candidate for governor this fall, to use tobacco settlement money for Medicaid programs.

“We have been trying for years to use the tobacco settlement money for Medicaid programs, but the Attorney General has stood in our way every time,” said LePage, who is term-limited and will leave office on Dec. 31 after eight years as governor. “Now that she is running for governor, she suddenly wants to use this money as a one-time budget gimmick to fund Medicaid expansion.”

A November report issued by Moody’s Investors Service called Maine’s Medicaid expansion a credit negative since it would create increased budget risks. Moody’s analyst Julius Vizner noted that the plan would increase Maine’s annual Medicaid costs by at least $55 million when fully implemented in 2021 and drive up federal funding for the program to 47% of annual state own-source revenue.

The LePage administration curtailed Medicaid eligibility in 2011 nine years after Maine last expanded the program, citing stresses on liquidity and reserves. The state repaid overdue MaineCare payments to hospitals in 2013 from proceeds of a bond that that securitized other state revenue and increased state debt.

Maine has general obligation bond ratings of Aa2 by Moody’s and AA by S&P Global Ratings. The state finished April with a $71 million surplus two months before the fiscal year ends June 30 after the month’s revenue totals came in $55 million above estimates.