AFA Update: Thursday, May 14, 2015- Tax votes, a Republican tax plan, changes to LD 1 and Medicaid Expansion

Wednesday afternoon the Appropriations committee met to discuss technical issues and to vote on certain tax items.

Commissioner Rosen and Deputy Commissioner Mike Allen led off the afternoon by presenting information related to Part M of the Governor’s proposed budget.

Part M, contains a number of changes to how yearend General Fund (GF) surpluses are handled and changes to the state’s appropriations growth limit as created in 2005 under LD 1.

The changes have the effect of starkly limiting the growth of possible GF funding into the future, even beyond that contained in LD 1.

Another provision eliminates the current exemption of the majority of state aid to local education (GPA) from the growth factor.

Materials provided by Commissioner Rosen can be found here.

The materials also include an updated table outlining the revenue expected following the May 1 Revenue Forecasting Committee (RFC) report.

A description of proposed changes to the treatment of yearend surpluses is the final piece of the packet. The Governor has proposed changing the portion of yearend GF surpluses that go to the Budget Stabilization Fund (BSF or “Rainy Day Fund”) from the current 48% to 80%.

AFA was joined by members of the Health and Human Services committee for a presentation by the Mannat Health Solutions. Mannat presented a report that outlines Maine would see net savings of $26.7M in FY16 by implementing the MaineCare expansion portion of the Affordable Care Act (ACA).

Republican members of both committees made a point of not attending this briefing by Mannat.

Patricia Boozang of Mannat presented the report and answered questions.

Costs, Budget Savings and Revenue Gains from MaineCare Expansion, April 2015 prepared by Manatt Health Solutions (MHS) for the Maine Health Access Foundation.  MHS  is the interdisciplinary health policy and business strategy advisory division of the law firm of Manatt, Phelps & Phillips, LLP.

Manatt has worked with hospital associations in Missouri, Oklahoma, Alabama and Louisiana in developing alternative expansion coverage strategies in those states. They also were retained by the Robert Wood Johnson Foundation to assist eleven states (Virginia, Maryland, Alabama, Rhode Island, New York, Minnesota, Michigan, New Mexico, Colorado, Illinois and Oregon) with implementing expansion coverage provisions, including evaluation of expansion strategies. They represented New Hampshire and Arkansas in developing private market coverage options that included managed care, health savings/independence accounts, healthy behavior standards and private market options.  Most recently Manatt assisted Montana’s state Medicaid program in developing a coverage model that relies on monthly premiums and co-pays and provides for employment assessment and participation in workforce development programs.

Manatt’s independent analysis finds $26.7 million in State budget savings are likely in Calendar year 2016 if the state accepts the federal funds set aside for Maine to improve access to coverage through the ACA:

  • State savings coupled with the new revenues that would flow to Maine as a result of expanding access to health coverage are sufficient to offset state costs attributable to expansion in calendar year 2016.
  • Findings are based on the experiences of eight states that expanded access to coverage early on – all are seeing significant state budget savings and revenue gains from expansion.

Manatt analyzed what the impact of using enhanced federal funds to expand access to coverage through MaineCare would have on Maine’s budget.  The analysis includes a discrete assessment of state costs, savings and revenue gains and does not include the broader economic impacts of expansion including job creation and other economic gains.

Manatt used publicly available Maine data along with the new information from states that have expanded their Medicaid programs to develop conservative savings estimates for Maine including:.

  • Total Savings from Accessing Enhanced Federal Matching Funds                       $12.6 million
  • Total Estimated Savings from Replacing State General Funds

               with Medicaid Funds                                                                                                                       $27.9 million

  • Total Estimated Revenue Gains                                                                                   +        $3.4 million

TOTAL ESTIMATED Savings and Revenue gains                                                                  $43.9 million         

  • Total Estimated Costs of Expansion              –       ($17.2 million)

             TOTAL NET Estimated Savings of Medicaid Expansion in Maine                                    $26.7 million


Maine would achieve savings in state funded only programs including state funded mental health and substance abuse programs ($20.3 M), hospital inpatient cost of prisoners ($5.4 M), health care paid for through General Assistance ($.5 M), Maine’s Drug for the Elderly Program ($.4) and Family Planning services ($1.4 M).

Maine would realize greater federal match (100% in 2016, 95% in 2017, 90% in 2020 and beyond) for health care provided to populations it currently pays for using a smaller federal match (historically Maine paid about 38% of the costs:  some people with disabilities ($2.9), Maine’s medically needy ($4.5 M),  pregnant women ($1.9 M), people receiving care through Maine’s Breast and Cervical Cancer Treatment Program ($.9 M) and HIV Waiver Program ($2.3 M).  Finally, Maine would realize an additional $3.4 M in revenues generated from the existing hospital assessment of 2.23% of net operating revenue since expanding coverage will increase hospital services and revenues.

The following items were voted as well:

  • Rejected the Governor’s proposal to require municipalities to tax non-profits
  • Accepted Part CCCC of the change package, (Rep. Verrow’s bill to exempt motor vehicle adaptive equipment from motor vehicle excise tax)
  • Accepted Parts H- 28 and H-44 (Rep. Powers bill to exempt non-profit libraries from the sales tax
  • Rejected the elimination of certain income tax form contribution check offs
  • Accepted the repeal of the following credits:
    • Forest management planning
    • Retirement and disability
    • Contributions to Family Development Accounts
    • Biofuel commercial production and use
    • Quality child care investment
    • High-technology investment
    • Employer provided long-term care benefits
    • Employer assisted day care
    • Jobs and investment
  • Increase the use tax calculation from 0.8% to 0.1%
  • Rejected the repeal of the special treatment of vending machine sales
  • Approved new exemption for non-profits offering direct support services to veterans with PTSD or traumatic brain injuries or their families

Today, Thursday, news began to emerge of an alternative Republican tax plan. Scott Thistle has the story at the Sun Journal (potential pay wall). It is unclear when or if the Republicans will present the plan either in committee or to the public.

The committee will continue to work Friday and this weekend.


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