Maine to settle Medicaid debt with booze bonds
AUGUSTA, Maine (AP) -- Maine lawmakers gave final approval on Thursday to a plan to renegotiate the state's liquor contract to pay its hospitals' years-old debt of hundreds of millions of dollars for Medicaid services — one of Gov. Paul LePage's top priorities.
Lawmakers in the House and Senate unanimously approved the bill, which no longer is tied to a proposal to expand Medicaid to 70,000 Mainers. Its passage is a major victory for the Republican governor working with Democratic majorities in both chambers.
"Our hospitals are key to the health of our community, and this final payment makes good on the lifesaving work that our nurses and doctors do for Maine families," said Rep. Margaret Rotundo, a Lewiston Democrat. "Paying back the hospitals is not a partisan issue, and I strongly suspect that all of us are very pleased to be able to vote affirmatively in support of our hospitals today," she said.
Under the proposal, sponsored by Republican Sen. Patrick Flood of Winthrop, the state's share of $183.5 million would be covered using bonds, which would be paid off with anticipated revenues from a restructured, 10-year liquor contract. That would trigger a federal match to complete the payment.
LePage's previous effort to pay back the hospitals fell short last month after Democrats tied it to a proposal to expand Medicaid under the federal health care overhaul, which the governor opposes.
Democrats said the two bills belonged together because accepting federal funding to cover more Maine families would help reduce hospital charity care costs, which are passed on to all Maine taxpayers.
But LePage, who campaigned on the hospital debt issue when he ran for governor in 2010 and has made repayment a top priority since taking office, vetoed the measure and re-introduced the hospital bill on its own.
Lawmakers approved a separate bill Thursday night to expand Medicaid, also sending that measure to LePage.
Hospital officials said being paid what they're owed will allow them to invest in equipment and their facilities, pay off loans, replenish savings and pay vendors on time.
"I'm not sure I thought today would ever happen, but I am very, very pleased and thankful it is here today," said Sylvia Getman, CEO of The Aroostook Medical Center in Presque Isle, which is owed about $12 million.
Not being paid by the state has forced hospitals to put off buying new equipment, restrict travel and hiring, freeze salaries and borrow money for equipment and projects.
They've also had to pay higher interest rates on loans because their credit ratings were downgraded by credit rating agencies, said Derrick Holland, chief financial officer for Eastern Maine Healthcare Systems, whose seven hospitals serving the northern two-thirds of the state are collectively owed $111 million.
"This is not a windfall for the hospitals," Hollings said. "Quite frankly, there's a lot of mopping up cleanup work that needs to be done to repair the damage that was a caused as a result of not being paid."
Lawmakers on Thursday emphasized the bipartisan support behind the liquor contract proposal, which includes the renegotiation of the prices of some brands to compete more aggressively with New Hampshire liquor sales.
"It's really good to see the hard work of both side of the aisle working together on this bill bringing this forward and bringing really good, strong support to this bill in a bipartisan fashion," House Republican Leader Kenneth Fredette of Newport said before Thursday's vote.
The bill's passage also could mean the release of some unissued bonds that already have been approved by lawmakers and voters. LePage has said he won't sign off on $105 million in public improvement bonds until lawmakers agree on how to pay back the state's hospitals. Democrats say the governor is holding the bonds hostage, putting job-creating road construction projects on hold.
Lawmakers say if the state will save $5 million if it completes the payments before Oct. 1.