Waiting on the feds
State eyes budget targets
- Education, human services in crosshairs
- Medicaid aid still hoped for
State agencies are starting the work to identify $100 million in general fund cuts for the current budget year, with targets ranging from $40 million to a mere $22.
When the state budget was adopted earlier this year, lawmakers assumed Congress was going to extend Medicaid aid to the states for another six months. That has yet to happen. “We will get by if Congress does not act,” said Gov. John Baldacci. “We are starting this process and there will be hard choices but we will get the job done.”
All of the agency plans for reaching the targets are due Sept. 1, with the governor required to issue a curtailment order by Oct. 1 if Congress has not acted to extend aid.
The targets include $39.7 million in cuts for the Department of Education as well as a paltry $22 for the Maine Fire Protection Services Commission. Education and human services account for nearly 70% of the $100 million target, according to Rep. Emily Cain, D-Orono, co-chair of the Legislature’s appropriations committee. The Department of Health and Human Services has a target of $29 million in cuts. Cain said cuts to education, including elementary and secondary schools as well as the state’s higher education institutions, come on top of significant cuts already implemented. “If we have to make this level of cuts again, on what we have already made, it will do harm,” she said.
The judicial branch’s target is $2.1 million in cuts to its $49 million budget. Chief Justice Leigh Saufley said the budget accounts primarily for paying employees, so the cuts will be painful. The courts have already reduced hours at some locations as part of earlier budget reductions, and Saufley said the courts are holding several positions open to save cash.
Out of the $2.7 billion yearly general fund budget, $417 million is exempt for constitutional reasons, according to Acting Finance Commissioner Ellen Schneiter. The largest single amount exempted is $231 million in the Department of Education for teacher retirement payments. “There are some expenditures we absolutely have to make,” she said.
Other exempt areas include debt payments for state bonds and other debt, such as borrowing by the Governmental Facilities Authority.
Kofman seeks health insurance waiver
- New law changes premium ratio
- MegaLife threatens to leave market
Maine Insurance Superintendent Mila Kofman is asking the Obama administration to waive a provision of the health reform law that requires 80% of health insurance premiums be spent on patient care.
The change could lead one of the three insurers in the individual market in Maine to leave the state, she argued. “It’s really important to make sure that the options that Mainers currently have stay in place,” she said. “That’s why I sought the waiver.”
The new federal health reform law, the Affordable Care Act, requires all health insurers have what is called a “medical loss ratio” requiring that 80% of premiums be used to provide care to patients. Maine law requires a 65% ratio.
In her letter to Health and Human Services Secretary Kathleen Sibelius, Kofman argued that Maine’s standard is not “substantially” lower than the new federal requirement because Maine law prohibits taxes and other expenses from being factored into the equation, and only paid medical claims count in figuring medical expenses under the ratio.
She wants Sibelius to agree that if the 80% standard were to take effect in Maine prior to 2014, it may destabilize the individual market, and therefore qualify Maine for a waiver under federal law.
“In its filings with the Securities and Exchange Commission, one insurer has indicated its intent to pull out of individual insurance markets,” Kofman wrote. “Based on preliminary discussions I had with the insurer, the company could continue to operate in the Maine market in compliance with our current MLR standard, but would probably need to withdraw from this market if the minimum loss ratio requirement were increased.”
That insurer is HealthMarkets Inc., which operates in Maine under the name MegaLife Insurance. It writes about 13,000 policies, about one third of all individual health policies in the state.
Anthem, a subsidiary of national health insurer WellPoint Inc., is the largest provider of individual health policies in the state. The public-private partnership of the Dirigo Health Agency and Harvard Pilgrim has a capped enrollment and has fewer than 8,000 policies in effect.
The MegaLife plans are specialized, catastrophic health insurance plans that have lower claims costs by their nature, Kofman said. Such plans are needed to provide coverage to Mainers until more comprehensive plans with affordable care subsidies become available under the new law, she said.
Kofman also asked that the waiver apply to policy renewals as well as to new policies issued until 2014.
June bonds bring summer work
- Highway projects to create 700+ jobs
- Drinking water bond draws fed $
Borrowing approved by voters in June is already putting some Mainers to work, with road repair and construction jobs leading the way.
“We wanted to make sure we could get projects out as fast as possible, so we had several projects we actually advertised before the bond vote,” said Transportation Commissioner David Cole. “According to my figures, we had about $9 million in bid projects opened June 9.”
The money became available for the projects earlier this month when Gov. John Baldacci officially proclaimed the results of the June 8 referendum vote. The $24.8 million approved for highway projects will be spent this summer and fall in nine counties, Cole said. “Those projects will generate somewhere between 700 and 750 jobs this summer,” he said. “Some preparation work is under way and paving will start in July.”
Jobs also will be created from building an offshore wind turbine facility — $11 million of the $26.5 million “energy” bond that voters approved, Baldacci said.
The University of Maine System is getting $9.5 million for energy conservation and infrastructure improvements, while the community colleges are receiving $5 million and Maine Maritime Academy has been allocated $1 million. Some projects are scheduled for this year, while others will not get under way until next year.
Voters also approved $7 million for the purchase of 233 miles of rail lines in northern Maine that the Montreal, Maine & Atlantic Railway plans to abandon. The Legislature appropriated another $7 million for that purpose earlier this year, but the future of the line depends on the federal Surface Transportation Board approving funds to upgrade the deteriorated tracks, which are used by more than 20 shippers.
“The northern project is about keeping 22 shippers from making decisions that would be negative,” Baldacci said. “You got to fight like heck to keep the jobs we have in this very competitive marketplace.”
The nearly $10 million in bonds for drinking water and waste treatment facilities will leverage about $33 million in additional federal funds. Those projects, some of which will start this year, are estimated to generate about 750 constrcution jobs.
Mal Leary runs Capitol News Service in Augusta. He can be reached at editorial@mainebiz.biz. To read more of Mal’s columns, go here.
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