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Maine Challenges Maintenance of Effort Requirements for Medicaid

Add Maine to the list of states vowing to block the Medicaid expansion from the Affordable Care Act. Of those states who have vowed to opt out, Maine is a little further down the scale in terms of impact. According to a Kaiser study, 43,468 low-income Mainers would get coverage under the expansion (for context, the number in Texas is 1,798,314). But what’s different here is that Maine wants to opt out through a separate legal process that would actually allow them to drop current Medicaid recipients from the rolls.

That brings us to Maine. Top officials there think the Supreme Court ruling does even more than allow them to opt out of the Medicaid expansion. In their view, the Supreme Court allows them to drop hundreds of thousands of residents from their Medicaid rolls right away. They filed a lawsuit Tuesday seeking permission to do just that.

The legal argument is two fold and has everything to do with something called “maintenance of effort.” That’s the Obamacare provision that requires states to maintain the exact same Medicaid eligibility levels they had back in 2010 , when the law passed. Maintenance of effort is set to expire in 2014, when the Medicaid expansion kicks in — and sets the same eligibility level for each state.

If Maine does not comply with this provision, it stands to lose all its Medicaid funding — 20 percent of the state budget. So, the stakes are big. But Maine wants to drop people from its Medicaid program — people who were eligible back in 2010 — and has two arguments for why the Supreme Court ruling creates the authority to do so.

I actually only see one argument coming from the Maine Attorney General, William Schneider. Basically, they’re saying that they want to cut the Medicaid rolls, and since the Affordable Care Act reflects a new program, they cannot hold the federal dollars in an old program (Medicaid) hostage. The Congressional Research Service disagreed when they looked at this, finding the maintenance of effort statute completely enforceable. To suggest otherwise would indicate that the federal government is not allowed to do what it wants with federal dollars. But ultimately, the courts will decide.

Maine wants to amend its Medicaid plan immediately, for the 2012 calendar year. “Maine’s standards in these areas still remain at or greater than the federal minimums with the proposed MaineCare eligibility changes,” Schneider wrote in a statement; in other words, the changes Maine seeks would still put them above the federal floor. The Legislature in Maine has already voted for these changes, which mostly revolve around eligibility (that’s the key thing that cannot be changed in the maintenance of effort requirements). The state wants immediate injunctive relief to administer these changes while the process works through the courts.

If Maine is successful, they blow a hole in the maintenance of effort guidelines that protected Medicaid between now and 2014. This will provide states an opportunity to cut the programs even further, magnifying the consequences of not accepting the Medicaid expansion by bringing in the possibility of further cuts.

Of course, if Mitt Romney wins the election, the likely outcome is a block grant of Medicaid that would cut the program by as much as 1/3, which could lead to as many as 14 million beneficiaries getting dropped from their coverage.

Medicaid represents another huge fight in the states that nobody, save Sister Simone Campbell, thought to mention on stage at the DNC.

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David Dayen

David Dayen

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