Medicaid, a federal health insurance program for low-income children and adults, is facing dual challenges at both the state and federal level.

Nationally, Republicans in Congress are pushing to cut about $880 billion in spending on healthcare and energy over 10 years. The nonpartisan policy institute Center on Budget and Policy Priorities has said this will be impossible to do without cuts to Medicaid, which covers about one in five Americans.

It is not yet clear what form those cuts could take, but proposals have included changing payments into fixed or per capita amounts, reducing the matching rate for Medicaid expansion population and adding work requirements. 

The Trump Administration has promised cuts would not reduce benefits and has said taxpayers lose as much as $521 billion annually to fraud, most of which they claimed came from entitlement programs such as Medicare and Medicaid.

Meanwhile, Maine state lawmakers last week failed to pass the supplemental budget with the two-thirds majority required to immediately address the $118 million shortfall in the state’s Medicaid program.

Most House Republicans did not vote for the measure, saying they wanted to see more reforms to the program. In response, the state said it would need to temporarily pause payments to certain healthcare providers.

On Thursday, Democrats, who hold the majority, advanced a budget over Republican opposition that bails out the Medicaid program, but only for the next year. The budget does not include anticipated $100 million increases in MaineCare costs in fiscal year 2027, the Portland Press Herald reported. Maine’s governor signed the budget late Friday afternoon.

Alex Carter, policy advocate for Maine Equal Justice, told The Maine Monitor that the state Medicaid deficit would be “just a small symptom — the tip of the iceberg — of what we would see if such massive cuts were made to federal Medicaid spending.”

So what does Medicaid actually cover in Maine?

Medicaid is MaineCare

First and foremost, it is important to note that Maine’s version of Medicaid is called MaineCare. The program is jointly funded by the state and federal government. 

There are some services — such as hospital visits, nursing facility stays or home health services — that states are required to cover under Medicaid, and then there are additional services states can opt into. For example, Maine has opted to also provide coverage for older adults in residential care who are spending down their income to reach the threshold for Medicaid, according to the state Department of Health and Human Services.

Thirty-two percent of the state’s total budget was spent on MaineCare in the 2023 fiscal year, according to the DHHS.

As of December, MaineCare had nearly 400,000 members enrolled in its various programs, which include Medicaid, Children’s Health Insurance Program (CHIP) and additional state-specific categories.

Nearly a fourth of those enrolled in MaineCare are part of the expansion of eligibility that Mainers approved by referendum in 2017 and Gov. Janet Mills adopted when she took office in 2019.

One possible way Congress could cut Medicaid would be to reduce financial support to states for this expansion population. Right now, Maine’s federal funding match rate for the expansion population — about 94,000 Mainers — is 90 percent.

The Robert Wood Johnson Foundation found that if Congress reduces that matching rate for people enrolled in Medicaid expansion, Maine would lose $117 million in federal money, forcing state leaders to cover the cost or remove 25,000 people from Medicaid.

Last year, about two-thirds of Maine’s nursing home residents and about half of Maine children were covered by MaineCare.

Impact on health system

Steven Michaud, president of the Maine Hospital Association, said MaineCare makes up about 18% of the hospital business across the state — although it ranges widely. 

Eighteen percent doesn’t sound like a lot, said Michaud, “but it is in our world.”

Lisa Harvey-McPherson, vice president of government relations for Northern Light Health, said revenue from MaineCare payments is different for each hospital in the system and ranges from 12 to 64 percent.

“Some provider types in Maine are almost fully reliant on MaineCare, like nursing homes and community behavioral health services,” she said. “We rely on community services to provide care to our patients throughout the state of Maine.”

Nearly half of all births at hospitals across the state were covered by MaineCare, according to a three-year average from 2021 to 2023 by the Maine Hospital Association. For rural hospitals, that increased to 55 percent, Michaud said.

MaineHealth said 13 percent of its total revenue is from MaineCare payments, and 43 percent of behavioral health patients are on MaineCare.

Katie Fullam Harris, chief government affairs officer, added that MaineHealth is “exceedingly concerned” about any reductions in eligibility or payments to providers.

“Maine’s healthcare infrastructure is teetering on the edge of real challenge right now,” she said. “There’s no room to absorb additional costs.”

This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.