AUGUSTA – As lawmakers braced for a potential order from Gov. Paul LePage cutting millions of dollars in state spending, the Department of Health and Human Services delivered even worse news Thursday.
DHHS Commissioner Mary Mayhew told lawmakers that her department faces a $100 million shortfall for the budget year ending June 30, 2013.
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The shortfall — equal to about $77 for every Maine resident — comes almost entirely from higher-than-expected spending for MaineCare, the state’s Medicaid program, which provides health care for low-income residents.
The Legislature will likely address the DHHS budget shortfall by passing a supplemental budget when the session begins in January.
The news was a shock for lawmakers, who are anticipating an order from LePage to address a $35.5 million drop in forecasted tax revenue. The solution could be a curtailment order by the governor that makes equitable, across-the-board cuts to state spending.
The MaineCare shortfall, on the other hand, will require lawmakers to negotiate with LePage and make tough decisions about cuts to specific services.
Lawmakers had anticipated at least a $10 million shortfall in the DHHS because of cuts that were passed by the outgoing Legislature but are unlikely to get federal approval. It’s also possible the federal government won’t allow another $20 million in planned cuts, and that money is part of the shortfall Mayhew announced Thursday.
Other factors account for the rest of the gap, she said.
“As much as the national media is focusing on the ‘fiscal cliff,’ this state has been grappling the last two years with a state fiscal cliff,” Mayhew said after the meeting with the Legislature’s Appropriations Committee.
Lawmakers questioned the size of the shortfall, in light of a decreased caseload brought about by eligibility cuts and relatively stagnant enrollment growth.
“We need to have a fuller understanding of what’s causing this,” said Rep. Peggy Rotundo, D-Lewiston. “What is clear is that this isn’t being caused by increased enrollment or growth in the program.”
Mayhew said her office was still calculating figures to prepare for a supplemental budget and she couldn’t cite specific cost drivers.
However, she said, MaineCare is still reeling from a loss of one-time federal stimulus funding and a drop in the federal match from 74.7 percent in 2010 to 62.5 percent in 2012.
Additionally, she said, the department’s forecasting models show increasing use by people now in the program. Mayhew said the models use a patient’s previous billings to project usage over the budget period.
The details of those projections could become a source of debate between the LePage administration and the Legislature’s new Democratic majority. The two sides were at odds last year over similarly grim budget shortfalls in the DHHS.
However, there does appear to be agreement that one cost driver requires attention.
Twenty percent of MaineCare users now account for 80 percent of all program spending. Some of those users are mental health patients whose conditions and treatments are long-term.
“We have to find a way to control those costs,” Rotundo said.
Staff Writer Steve Mistler can be contacted at 632-7016 or at:
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