When I heard that the great state of New Hampshire was considering an expansion of its Medicaid program under Obamacare, the first thought I had was of a quote from Dante’s “Inferno”: “Abandon all hope, ye who enter here.” I say this as the Republican Leader in the Maine House of Representatives and as someone who has served on my state’s appropriations committee, where we spent countless late nights trying to patch the Medicaid-induced leaks in our state budget after past expansions.
Maine and New Hampshire are two very similar states in terms of geography, culture, and population size. They are two very different states, however, in terms of economic policy. It wasn’t always this way. Decades ago, Maine took a decidedly sharp left turn, heading in the direction of more government programs and higher taxation. New Hampshire avoided the income tax, the welfare state, and other trappings of big government.
Despite starting out in similar situations decades ago with roughly equally sized private sector economies, New Hampshire has rapidly outpaced Maine according to almost every economic indicator.
New Hampshire’s median household income is about $65,000 to Maine’s $48,000. Your unemployment rate has been among the lowest in the country since the recession. Liberals in Maine like to tout welfare programs that are designed to reduce poverty, but our poverty rate is 58 percent higher than yours, despite Maine ranking second in the nation for welfare spending as a percentage of overall state spending.
It’s interesting how liberals in Maine make excuses for New Hampshire’s success while liberals in New Hampshire make excuses for Maine’s failures.
We’ve made a lot of positive changes here in Maine thanks to Gov. Paul LePage and a Republican legislative majority in 2011-2012. Those reforms began to lower taxes, trim regulations, reform welfare and bring some fiscal sanity to Augusta, and people are starting to take notice. But there’s a long way to go.
Mainers are hardworking and independent-minded people, and they’re sick of economic stagnation. I’m confident we’ll stay on the right track.
In fact, our competitive advantage with your state would be greatly enhanced if we managed to resist Obamacare’s welfare expansion while you embrace it.
Over the past 10-20 years, Maine has taken the bait of federal matching funds and expanded its Medicaid program considerably while New Hampshire has declined the money and its attached strings.
All of the promises of Medicaid expansion have fallen flat. Emergency room usage goes up, not down, with Medicaid coverage. Charity care provided by our hospitals has tripled. Federal matching rates have been slashed. Physical health outcomes are no better. Cost and enrollment levels were not manageable; instead, expansion shattered its original cost estimates.
What this has meant for Maine’s budget, taxpayers and economy is very tangible. Maine’s total income tax revenues collected equal the difference in cost between Maine’s and New Hampshire’s public welfare departments. So if our DHHS was the size of yours, we could eliminate our income tax.
Medicaid’s share of the state budget has doubled since 1998 and now sits at 25 percent of all state spending. By 2024, medical welfare will consume 36 percent of our budget. State aid to municipalities is under siege, taxes continue to go up, and politicians have even raided oil spill cleanup funds to plug the perennial budget gap in our Medicaid program.
I understand that the proposal currently being considered in Concord uses federal Medicaid expansion funds to expand subsidized private coverage on the exchange. That’s a better deal than the one originally offered by the feds under Obamacare, and you can credit Republican leaders in your state’s Senate with that. But it’s still an expansion of state government and a major strain on taxpayers over the long term, similar to what we’ve experienced in Maine, and I would caution you to avoid it. The most important thing to remember, as citizens of the Granite State, is that the “New Hampshire Advantage” is not by accident; it is by design. Your elected officials have made good economic decisions over the years and it has paid off.
Maine has gone down the path of Medicaid expansion before. Take it from me. You don’t want to follow us.
Rep. Kenneth Fredette of Newport, Maine, is the Republican Leader in the Maine House of Representatives.