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Medicaid Expansion, Hospital Tax Await Maine Legislature

Analysis  |  By Jack O'Brien  
   July 06, 2018

Following the holiday weekend, Pine Tree State legislators are expected to vote on a funding source for Medicaid expansion after another veto from Gov. Paul LePage, while also considering a potential tax on hospital revenues. 

Medicaid expansion is once again at the center of debate in Maine, where Gov. Paul LePage, voters, and health policy advocates are at loggerheads over the issue.

In a referendum last November, voters approved a plan to expand Medicaid to nearly 80,000 Mainers under the Affordable Care Act (ACA). This made Maine the first state to expand Medicaid via ballot initiative.

However, LePage vetoed the expansion effort Monday, citing a lack of long-term funding for the program and calling the proposed funding solution "budget gimmicks."

Expansion talks after another veto

  • Once the holiday weekend is over, legislators are expected to take up debate on funding for the program, which was set to begin enrolling residents Monday.

  • Medicaid expansion is expected to cost the state at least $807 million over 10 years, according to a 2014 report from the Maine Department of Health and Human Services (HHS), and increase enrollment to nearly 100,000 residents.

  • The state legislature will try to find a Medicaid expansion plan that will appeal to the veto-friendly governor.

  • In 2013 and 2014, the legislature approved Medicaid expansion plans but received instant vetoes from LePage following passage. 

LePage's efforts to block Medicaid expansion have been challenged in state court by ACA-supporters, who accuse him of ignoring the ballot initiative. Last month, a state judge ordered LePage to implement Medicaid expansion, citing the "complete failure to act" by HHS. 

Hospital tax on the table

Since stable funding for Medicaid expansion is one of the primary reasons for LePage's vetoes, he has proposed an increase on the state hospital tax to cover the cost of expansion.

  • Currently, the tax rate is 2.2%, which could rise to 6% under LePage's proposal.
  • Last month, Virginia legislators agreed to expand Medicaid while also instituting two new taxes on hospital revenues to support the policy. 
  • Policy analysts expect the Virginia tax to provide private acute care hospitals with $880 million in benefits over two years, mostly due to expanded revenue options under Medicaid and increased reimbursement rates for providers.
  • A Maine Hospital Association representative told the Associated Press that Maine hospitals already pay $100 million in taxes annually and would oppose the measure.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.


LePage's seventh veto of Medicaid expansion came after voters approved expansion last November via referendum.

Discussion of legislative action on the measure comes as a lawsuit pressuring LePage to enact Medicaid expansion makes its way through the courts.

One solution to securing LePage's support for Medicaid expansion could be taxing hospital revenues, though the state hospital association is opposed to the idea.

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