Thursday, December 15, 2011

Were did Maine's budget deficit come from?

December 15, 2011

Yesterday I sent you a "snapshot" of the services to be eliminated in Governor LePage's proposal to cut about $220 million from the Department of Health & Human Services. People are asking me, "where did the shortfall come from?"  

While we don't have the complete answer yet, it appears that, as the Kennebec Journal reports today, most of it is from computer "system defects" involving billing and "miscalculations" about federal funds and budgeting in the Administration's budget passed just a few months ago. In a "Capitol for a Day" event yesterday the Governor apparently blamed most of the deficit on "rampant fraud" according to the Kennebec Journal.  The Governor's claim is just not true.  Fraud exists in all sectors of the economy and government programs are not immune, but facts are facts and this shortfall has nothing to do with fraud. Also, not much of the overrun is due to new people signing up for services (3 percent).

It is true that both private insurance and Mainecare face higher and higher health care costs and we have to act to reduce wasteful spending and inefficient medical care.  Unfortunately several programs to do just that were repealed or rolled back this year, including the health systems advisory council, the state health plan, checks on prescription drug pricing fraud, and the certificate of need process. A focus on real health care cost controls linked to quality, as already put in place by the state employees health program, would be a good start to a long-term sustainable fix to ongoing budget shortfalls.  

Today's Kennebec Journal's editorial, which I reprint below, makes the point that short-term math mistakes and computer problems should not be used to justify permanent elimination of needed services. We also should consider whether it makes sense to allow a future tax cut passed this year to go into effect.  The budget passed in June enacted the largest tax cut in Maine history, and one that was skewed towards those who make the most.  This cut has not gone into effect, and will cost close to the $200 or so million we are short in DHHS. Starting in Jan. 2013, the new tax changes (which I did not vote for) give an average annual income tax reduction of:
  • $2,810 to the wealthiest 1% (over $360K adjusted gross income)
  • $123 to the middle 20%
  • $7 to the bottom 20% (including minimum wage earners)
Also starting in 2013, they give an average windfall of $43,500 to those inheriting estates worth over $1 million. Fixing inequalities in the tax system makes sense; adding inequality and adding to our budget problems does not. For more on the tax issues, read Rep. Seth Berry's blog.
Here is today's KJ and Morning Sentinel editorial:

Gov. Paul LePage claims that an explosion in demand for MaineCare services is the real reason for a deficit in the program, justifying his proposal for deep cuts that affect 65,000 people.

The numbers provided by his administration, however, don't support his case.
In a letter to lawmakers, the Department of Health and Human Services documented a $120 million hole in the budget that was passed in June. It's true that increased demand for services accounted for some of the shortfall, $6.5 million or about 3 percent of the total.

Errors account for much more of that deficit, however, errrors such as the state's failure to account for room and board for patients in assisted living and group homes, ($19.3 million) or for "system defects," which delayed payment on some of last year's bills into the current two-year budget cycle, missing out on enhanced federal matching funds ($29.6 million).

None of this means that the bills don't have to be paid, but it should influence how the Legislature goes about paying them.

If these errors are one-time events -- and we hope that they are -- it doesn't make sense to treat them as permanent structural costs that require a systemic fix.

But that is what LePage proposes to do, cutting some services to all MaineCarerecipients and eliminating coverage completely for thousands, both young and old.

In his radio address last week, LePage referred to MaineCare as "welfare" and complained that it created a cycle of dependency. It is hard to see how a nursing home patient who will lose podiatry or physical therapy coverage is a "welfare" recipient, or how cutting those services would make that person more independent.

It also doesn't explain why these people should bear the burden of mistakes that were made in the upper reaches of government. The governor, once again, appears to be pushing ahead informed more by anecdotes about welfare cheats than the real problems his "solution" would cause.

Lawmakers will hear plenty about those problems in the public hearings that started Wednesday and are expected to last throughout the week. The testimony should give them pause to think about whether the governor's proposal is the best way to solve this problem.

The governor's letter about the cause of the deficit, however, should give them more than enough information to know that the problem that needs solving is not what the governor says it is.

Babies, veterans and frail elderly all hit by Maine Governor's service cuts

Day One of Hearings on Maine DHHS Cuts - December 14, 2011

Maine Governor LePage has proposed very large cuts (about $220 million) to programs in the Department of Health & Human Services, which he says must be made immediately due to "miscalculations" in the budget passed just months ago, and reduced funding from the federal government. Almost none of the overruns are due to new people signing up for services. 

Hearings are being held this week on the proposal, and we are still trying to get a clear picture from the Administration as to the cause of the shortfall and the impact of these proposals.

I am not one to engage in exaggeration.  As a lawyer I try to be very precise and factual with the statements I make.  I find this plan to cut services shocking.  In all my many years of service in the Legislature, I have never seen anyone propose such cuts, which will be devastating to thousands of our neighbors and family members. Here are just a few of the impacts, from information provided at the hearing held today.  Here is a link to some of the testimony. You can listen in on the hearings and work sessions here.
  • The Maine Veterans' Homes will have to permanently close all 6 of its assisted living units, serving 178 veterans.  Where will they go? Why aren't we taking care of our155,000 veterans?
  •  More than 6,000 people will be either homeless, put into nursing homes, or dumped on families without any services or care.  These are people who cannot live on their own because they are frail elderly (over 4200) or seriously disabled, including people with mental illness. Robert Small of Hallowell, a former Hall-Dale coach and teacher, provided written testimony that because of several strokes he cannot live on his own.  Is this how we treat the teachers of our children?
  • 20,000 seniors will lose all of the help they get paying for copays, premiums and  prescription drugs that aren't covered by Medicare (for example because of the famous "donut hole.") Seniors on average take 5 medicines a day according to AARP's testimony.  52,000 people total will lose some or all of help with Medicare and/or prescription drug costs.  Do you think some elderly could die if they cannot pay for their drugs? I do.
  •  7,000 young adults, ages 19-20, will lose their health care. 29,000 working parents will lose health care.  Child care vouchers will be cut in half.  How can a single mom work if she has no child care for her toddler?  Would you allow her to bring her child to your business to hang out during her work hours? Head Start funding is to be eliminated, too.
  • More than 4,000 jobs will be lost at a time when Maine and the US already suffer from long term high unemployment.  Where will these productive Maine workers be able to get a job?  
  • Even though physical therapy is far, far cheaper than surgery, PT will be cut. How will that save money? How will someone get back to work and not be a drain on our social services if they can't get physical therapy? How does this make sense?
This is just a snapshot of a few of the impacts of the proposed cuts.  Some of the proposals are not legal (the federal government rejected the Governor's request for a waiver a few months ago to stop the prescription drug assistance).  Other cuts will costs the state hundreds of thousands of dollars in federal matching funds - for some programs we get an almost 2 to 1 match from the feds.  One of the cuts actually transfers thousands of dollars from these safety net services to the "Rainy Day Fund" - for what?  A future slush fund? One of the cuts takes money from the tobacco settlement that is used to fund prevention - which works - and puts that money in the general fund.
There has to be a better way to run this state, and I am not willing to support this poorly thought out proposal when there are alternatives.  I want to be part of the solution and am ready to roll my sleeves up to figure out the best plan.  But I am not willing to mortgage our future by hurting our children, nor treat our elderly and our veterans and people who have disabilities like they are worthless.  That is what the Governor's cuts do.    

Thursday, September 15, 2011

Why is the US Government Negotiating Trade Deals That Reduce Access to Affordable Medicines?

I had the opportunity last week to attend the Chicago round of trade negotiations for the Trans-Pacific Partnership (TPP) and make a presentation to treaty negotiators from nine countries, including the United States.  I believe I was the only state legislator participating in this event, where I spoke as part of a panel on pharmaceutical provisions in trade agreements that could undermine the ability of states to negotiate the lowest rates for drug reimbursements and pricing. (The Trans-Pacific Partnership Agreement is an Asia-Pacific regional trade agreement currently being negotiated among the United States and eight other partners, including Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.)

Trade policy has direct impacts on Maine businesses – both positive and negative – and can override Maine law concerning environmental rules, health policy, and pharmaceutical pricing.  I am lucky to have been appointed recently to the Intergovernmental Policy Advisory Committee, which was established by Congress to advise the U.S. Trade Representative on the impact of trade agreements on state laws. Even so, as one of only a few state officials who are directly consulted on trade policy, I can say that while I appreciate the access, state consultation is a pretty hit-or-miss affair.  

This year the Maine Legislature unanimously passed a bipartisan joint resolution, HP 1552, regarding states' rights in international trade policy, posted here. The Joint Resolution calls on the President of the United States, the United States Congress and the United States Trade Representative  to "seek a meaningful consultation system that increases transparency, promotes information sharing, allows for timely and frequent consultations," and urged and requested "that state laws that are subject to trade agreement provisions regarding investment, procurement or services be covered by a positive list approach, allowing states to set and adjust their commitments and providing that if a state law is not specified by a state as subject to those provisions, it cannot be challenged by a foreign company or country as an unfair barrier to trade."  

I am one of many state lawmakers who are concerned that language that may be under consideration for inclusion in the TPP treaty will result in increased costs of health care for our citizens and for the state budget. My goal in going to Chicago and in participating in the official stakeholder presentations there, was to send the message that the trade agreements must not raise already expensive drug prices, limit the introduction of less expensive generic versions of drugs, or interfere with Maine's ability to negotiate prices under MaineCare and for seniors. Currently, Maine receives on average 50% of every dollar spent on prescription drugs in public programs back into the general fund in the form of rebates from drugmakers.  

Obviously, especially in this time of fiscal constraints, we don't want to see any policy changes that would add to our state budget costs.

In the TPP talks, according to an analysis of leaked text and analysis of a rather general public medicines white paper that was issued this week by USTR, the US has proposed provisions that would extend monopoly rights of pharmaceutical companies; would remove safeguards that allow patent applications to be challenged before they are granted; would allow patents to be granted for minor variations to existing drugs; and would provide extra rights for pharmaceutical companies in court.

Some health activists have gone so far as to call the US position "whitewash" and "Orwellian."  Read what American University law professor Sean Flynn has to say here.  

The pharmaceutical industry is also lobbying for further restrictions on the use of clinical trial data by the manufacturers of generic medicines seeking to register their generic versions - turning to secret trade deals to prop up profits as their blockbuster drugs go off patent.  Secret cables leaked by WikiLeaks confirm the industry's hands-on approach to USTR on these issues. 

The Center for Policy Analysis on Trade and Health (CPATH) and other public health experts have called on trade officials to reverse course and protect health. CPATH's research established that intellectual property rules in the Central American Free Trade Agreement (CAFTA) raised medicine prices in Guatemala by up to 856%.  The Austrialia-U.S. Free Trade Agreement authorized drug company intrusions into Australia's cost-effective drug purchasing system, resulting in increased prices.

The US is also seeking provisions in the TPP agreement that would expose governments to legal action by foreign companies if governments introduce policies (including policies to protect public health) that affect these companies' profits. Similar trade provisions are the basis for a legal challenge by Phillip Morris to Uruguay's tobacco packaging warning label rules.  Maine, like other US states, has actively sought to reduce smoking rates, and the use of trade provisions to reverse hard-won gains in public health is very disturbing.

All of this is cause for real concern. Somehow, the US government seems to have confused the interests of large pharmaceutical companies with the public interest in access to medicines.  Sometimes those interests overlap, but often they do not.  Checking in with state legislators who struggle to maintain and expand access to affordable medicines with increasingly tight state budgets would be a useful reality check for US trade negotiators.  

Wednesday, May 25, 2011

Common Sense in Short Supply at Statehouse

There's a lot going on in the Legislature these days but common sense still seems in short supply. 

The health insurance bill I worked hard to defeat, LD 1333, has been signed into law as Public Law 90.  A lot has been said about this misguided policy that was ramrodded through the Legislature, but the bottom line is I believe the law is a giveaway to the insurance industry at the expense of consumers. 

The more I find out about this law, which still has not been analyzed by the Bureau of Insurance actuaries, the more concerned I become.  After the Senate amended the bill, many people thought that some of the major concerns were fixed.  Unfortunately this just isn't true.  I prepared this fact sheet for House members so that they could understand the amended bill. 

No prior rate review.  Just last week the Bureau of Insurance denied Anthem's request to raise rates nearly 10% on average in the individual market.  While the 5.2% allowed is no picnic, the new lawrepeals the authority in the future to review and deny similar rate increases.

An unregulated piggybank for insurance companies. The worst thing about the new law is that it grants the insurance industry taxing authority with little oversight over how much money they raise from policyholders and how that money is used.  The industry-dominated board of the the reinsurance fund (which includes NO consumers) sets the premium tax and decides which policyholders' medical claims will be paid from the fund.  They can literally game the pool in such a way as to get the most money, and then are exempt from prior review of rate increases. If you missed it, here is my commentary published recently in the Kennebec Journal. 

PL 90 makes Maine law inconsistent with the Affordable Care Act (ACA), an interesting situation leading to a decision that legislation LD 1498, to implement the ACA will be carried over to January, while a stakeholder group appointed by the Governor meets to discuss the issues.  Of course the Governor has vowed to repeal the ACA, and legislation is still pending to make implementation of the ACA a felony. Hmmm... I wonder how that will go.  

Common sense has prevailed with respect to some of the most contentious bills this session. We did not repeal the bottle return law, which would have eliminated hundreds of jobs and led to trash on the highways.  We did not repeal our billboard law, which would have hurt tourism and the "Maine brand." We did not eliminate the Board of Environmental Protection or agree to develop 3 million acres of northern Maine. Read the final version of LD 1 which omits most of the original language proposed by the Governor. 

But many proposed rollbacks have gone through or are still pending.  Abolishing LURC is still possible, with the GOP majority of the Ag & Forestry Committee pursuing a 1333-style ramrod approach to policymaking that was so successful before.  The pesticide notification registry is likely gone. The percentage of electricity generated from renewable energy instead of Midwest coal may be reduced. We repealed the state health plan.  The Superintendent of Insurance was essentially prevented from doing her job until she resigned.  And we may yet vote to allow guns in the Statehouse... if the kiddies want to visit, maybe you shouldn't wait until next week!

Monday, May 9, 2011

Whoopie Pie Bill More Carefully Reviewed Than LD 1333 Upending Entire Insurance Market


L.D. 1333 would repeal many of Maine's basic health care consumer protections, allow out-of-state insurers to market policies in Maine without a way to enforce those policies and make sure claims are paid, undermine access to quality affordable health care for older Mainers, rural residents, people with pre-existing conditions and small businesses through significant rate hikes based on where you live or your age. Read this report by the independent Maine Economic Policy Center to find out more.

Rate increases.  LD 1333 promises a lot, but it can't deliver on its promises, and in the process a lot of people, especially in rural Maine, will lose the insurance they have because they simply won't be able to afford the price increases.

It is true that some people will get a price break.  The Bureau of Insurance says LD 1333 will lower the statewide average cost of health insurance by three percent. If you are a young healthy guy in Southern Maine, your rates could go down much more than that.  But if you live in Central, Eastern or Northern Maine - especially if you are middle-aged -your rates could go up a lot. Read the bill. (This is actually the committee amendment which replaced the bill).

Just how much will your insurance go up?  
According to the Maine Bureau of Insurance:
·      14.9% of the Individual Market will see an average rate increase of 29.9%
·      42% will receive premium increases of some amount  
·      Maine people living in the North will experience on average a 19% rate increase
·      Maine people living in Down East will experience a 22% rate increase
·      Maine people who want to keep the insurance policy they currently have will see price increases rise as high as 170 percent over the next 3 years.

Tax increases. These rate increases don't include the cost of the $48 dollar per head annual tax ($292 for a family of four) on anyone who buys health insurance, which will go to insurance companies to help pay for the policies of people who have the most expensive claims.

By the way, these rate hikes are based on the 3:1 ratio between the lowest allowable rate and the highest rate that LD 1333 begins in 2012, not the more drastic 4:1 and 5:1 ratios the bill plans for 2014 and beyond. These higher rates are actually illegal under federal law, as are other provisions of LD 1333.  

Mandates.  Although proponents say LD 1333 keeps all the mandates, such as pregnancy coverage, chiropractic and mental health services, it actually allows businesses to band together and offer insurance that doesn't include the mandates.

Making health care inaccessible.Insurers could make you drive from Fort Kent to Kittery to get your weekly cancer treatments because LD 1333 repeals distance protections. Here is the testimony of Maine Hospitals on an identical provision in another bill.

Gets rid of health planning and costs and quality initiatives. LD 1333 eliminates the Maine health plan and the commission that works to reduce medical costs under the theory that the freed-up marketplace will police itself.

LD 1333 picks winners and losers. 
It lowers rates for some at the expense of many. It pits North against South, the middle-aged against the young. It imposes a new tax on health policies without doing the math about how much money is going to be needed. It will delay access to health care treatment.

I supported an amendment offered by Rep. Henry Beck which fixed the worst problems in the bill and at least moderated the price hikes and required more oversight and justification of the new taxes. Here is a chart comparing the bill and Rep. Beck's amendment. 

Unfortunately this amendment was rejected on a party-line vote and LD 1333 was passed without any support from Democrats.

Sunday, April 24, 2011

What's Good for Big Pharma is Bad News for Maine Seniors & Taxpayers

PillsIt seems there is an all-out assault on prescription drug programs In Maine Governor LePage's budget as well as in bills pending before the Health and Human Services (HHS) Committee. These proposals certainly will help the bottom line of large pharmaceutical concerns, but they harm over 40,000 seniors who rely on state assistance to purchase prescription drugs, and repeal important pricing protections for consumers and taxpayers. 
Its hard to believe that legislators who campaigned for strong financial oversight and against waste would support repealing a law that bans kickbacks and requires rebates be passed through to consumers, but that's exactly what Maine bill LD 1116 would do. Another bill, LD 719,will limit doctor, patient, and government access to independent information on prescription drug effectiveness, costs, and money spent on drug advertising, and make it harder to audit drug company pricing information. 
These bills will drive up taxpayer costs for MaineCare and affect the pocketbooks and health of all patients purchasing prescription drugs - while helping giant pharmaceutical manufacturers and pharmacy benefit middlemen play the spread and game drug prices to their benefit. You think I'm exaggerating? Pharma now tops all industries, including defense, in total fraud payments paid under the False Claims Acts. And of the 150+ pharmaceutical company settlements—that’s $19.8 billion in penalties between 1991 and 2010—three quarters of both the settlements and penalties have occurred since 2006. Read Public Citizen’s report.
It doesn't seem sensible that the Republican majority of the HHS committee would vote in favor of the Governor's plan to cut funding for a program that draws down federal matching money for needy seniors to help them with their drug costs and Medicare premiums and deductibles. As a result, "Twelve-thousand-five-hundred will lose all assistance, 6,500 will lose most assistance and about 21,000 will lose some assistance," says Ana Hicks of Maine Equal Justice Partners, which advocates for low-income Mainers, in this MPBN news report.  

This is not a situation where there are no alternatives.  Remember, the Governor's proposed budget includes hundreds of million of dollars in tax cuts that largely benefit the highest-income people in the state.  In fact, Governor LePage has even proposed eliminating the MaineRx prescription discount program, a discount provided not with taxpayer money but instead by the drug manufacturers, and where the minimal program administration costs could be easily paid for by a member fee.

Is this people before politics? Or the other way around?

Sunday, March 27, 2011


We recently celebrated "Sunshine Week" in Maine, an annual recognition of  the importance of transparency in government and freedom of information. Among the milestones celebrated are the federal Freedom of Information Act and the 50 separate state acts. Maine's Freedom of Access Act requires all public proceedings be open to the public; public notice be given for all proceedings; and that public documents be available for inspection and copying. More on our law
Public access and participation in government is the cornerstone of our democracy. This is a good time to take stock: how well is Maine doing? Unfortunately, not so great, despite promises by Governor LePage that his government would be the "most transparent in history."  In today's Kennebec Journal, Mike Tipping's column reveals comments by the Governor comparing use of Maine's Freedom of Access Law to "internal terrorism".  This follows an Executive Order creating a business advisory council that would be explicitly exempted from our right to know laws. After a firestorm of criticism from both Republicans and Democrats, not to mention the media, Governor LePage announced he will back off from this plan, but his recent comments seem to indicate that he still doesn't fully appreciate why people are upset and why secret advisory panels don't meet most definitions of "transparency".   
One reason regular people are upset is they perceive that lobbyists have access to state decisionmakers that they do not.  This perception certainly isn't a recent development, but recent actions by this Administration and the Legislature do nothing to change it. For example, a key initiative of the Governor, one he has yet to back away from, would limit citizen access to hearings on environmental issues by abolishing the citizen Board of Environmental Protection and replacing it with a panel of administrative law judges.  

Unfortunately, this attitude toward public participation has also infected the Maine Legislature these days. The Regulatory Fairness & Reform Committee has held 8 public hearings, but NONE of these forums were on the actual details of LD 1.  The Governor's 48-page amendment to LD 1 was handed to the Committee during the final public hearing, effectively limiting public scrutiny of the proposal until after public comment was taken.  LD 1 appears to be the leading edge of a really bad trend in the Legislature, the emergence of "concept drafts".  These have been authorized for a few years in Joint Rule 208 but seem to be coming into their own this year (a quick search found 74 such bills as of March 27). The problem with concept drafts is they don't include actual legislative language.  Thus, the public hearing is on a one- or two-sentence summary, and the public is effectively prevented from weighing in the details which are written up later.
This has many bad consequences, one of which is lobbyists and other insiders get heard but others do not.  As we have seen with LD 1, which has expanded from 2 lines in the printed online bill to a 48-page amendment not available in the Legislative Bill Status System, most of the input to the committee is being provided in work session by lobbyists and Administration staff, at the invitation of the committee chairs -- a very different scenario from the everyone-is-welcome free-for-all that characterizes the typical Maine Legislature public hearing.  (By the way, if you want to find out when those public hearings are and don't have a computer, forget it next session, because the Secretary of the Maine Senate announced March 10 that hearing notices will be online only starting December 1.)    

Even if you figure out when the hearing is, how can you testify on a concept bill? It is actually impossible to know what these bills intend to do.  Take LD 934, An Act To Reform the Dirigo Health Program (please!).  What does this bill purport to do? Here it is in its entirety: "This bill proposes to reform the Dirigo Health Program established under the Maine Revised Statutes, Title 24-A, chapter 87."  Whoa! How? To what end? Should I support it? Oppose it? Based on what? Is this really a serious piece of legislation, or is it a messaging opportunity? How about this one, LD 515, An Act To Review State Water Quality Standards.  Here is the complete bill: "This bill would revise and update water quality standards utilized to establish waste discharge license parameters. This bill would also establish procedures for developing alternative state and site specific water quality standards." Huh? Is this going to tighten up our water pollution laws or gut them? Absolutely no way to know. 

No matter what your political persuasion, let's agree that public access to information about government and the opportunity to participate in a meaningful way is incredibly important.  Twitter, Facebook and one-sided websites controlled by partisan caucuses cannot replace the spirited debate and and exchange of views that has long characterized our Citizen Legislature and Executive Branch. Sunshine Week and what it represents should be a wake-up call to us all - feel free to speak up!