LePage MaineCare plan shows problems of containing any entitlement program

Trying to strike a balance between cutting government programs and finding money to pay for essential services can be dangerous.

Dangerous for the office holders, who have to decide what to cut and the taxes to pay for the rest. Dangerous for the people who are truly dependent on government help for basic health care.

Nothing illustrates the problem better than the  health and human services cuts that Gov. Paul LePage has proposed. Most of them fall on MaineCare, the state’s version of Medicaid, the low-income health care program.

MaineCare is an entitlement program. Its costs are driven by the number of eligible people using it – now 361,000 – and not by the amount of money appropriated for it. If an entitlement program begins to absorb more money than tax revenues can support, it becomes a target for reduction. The two obvious ways to accomplish cuts are to define who is eligible more narrowly and reduce the scope of services.

The standard that LePage appears to have applied is that to be covered the need must be urgent and severe. That standard – all entitlement programs have some standard – is a form of rationing, because it limits the scope of the program. He also proposes reducing the categories of people eligible for MaineCare.

The proposed Maine standard focuses on cutting costs immediately to bring the budget into balance. Few propose raising the state’s relatively high taxes to keep MaineCare intact. But the proposal would push much of the reduced cost onto hospital users. Either directly or through their insurance premiums, they will pick up the cost of emergency room visits by those who have lost state support. And today’s uncovered health care can become tomorrow’s urgent and severe illnesses, raising future costs.

Health conditions that are not eligible for coverage and left untreated can ripple through the economy causing costs to employers in lost time and employees in lost income.

A recent story in the New York Times shows the difficulty in cutting costs. President Barack Obama gave Dr. Donald M. Berwick, a political outsider, a temporary appointment as head of Medicare and Medicaid. Somewhat surprisingly because the effect of his proposal would be similar to the G.O.P. position, Republicans refused to confirm him, citing his advocacy of a cap on health spending. It was condemned as rationing.

In his parting statement, he said that federal health spending could be cut by 20 to 30 percent by eliminating “activities that don’t have any value.” That would amount to $150-$250 billion a year. Such a cut would have equaled 38 percent of the $4 trillion reduction over the next 10 years that is needed to bring the federal budget under control.

The doctor learned that many competing interests, both inside and outside of government, strongly influence decisions about government programs. Expert opinions like his must give way to the net result of the conflicting pressures. His opponents branded him as a person who would “ration” health care, without acknowledging that any proposal, including LePage’s and their own, must draw the line somewhere.

The influence of interest groups pushing one way or another on possible program changes is often a function of the role of money. Recently, the Obama administration proposed stiff new rules to prevent private, profit-making colleges from making false promises to attract new students. The education of a vast majority of these students is financed by the federal government. If standards were tightened, discouraging unrealistic academic hopefuls, the cost to the federal government would decline.

As a New York Times investigation found, the industry went to war and in just a few months spent $16 million to lobby the U.S. Department of Education — and the rules were watered down. The result is that the anticipated savings in the multi-billion dollar federal education budget were reduced, and prospective students will continue to be enticed by promises that cannot be fulfilled.

The most important battle in Washington’s partisan wars is about the scope of entitlement programs, mainly Medicare and Medicaid, which are assuming a growing share of the federal budget. Both Republicans and Democrats admit there must be cuts, which amount to rationing.

Democrats want fewer cuts than the GOP does, with some of the growing costs covered by increased taxes on the top one percent of earners. Republicans, saying such a tax increase will harm economic recovery, want deeper cuts in entitlements.

Traditionally, voters would expect a compromise to be reached by the two sides. That will almost certainly have to happen in Maine on the LePage proposal, because the state must have a balanced budget. On the federal level, the deeply divided Congress may keep pushing the question off until after next year’s elections.

Gordon L. Weil is a contributing writer at the Maine Center for Public Interest Reporting (pinetreewatchdog.org). He is an author and publisher and served as a Maine state agency head. Weil was also a correspondent for the Washington Post and a columnist for the Financial Times. He is a former Harpswell selectman. He may be contacted at Weil.Gordon@gmail.com.

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