Economist points to another major flaw in controversial Medicaid expansion report

Credit: 401(K)2013/Creative Commons.

Credit: 401(K)2013/Creative Commons.

Consultant Gary Alexander, who was rebuked by the Pennsylvania Auditor General for his work there, unveiled his study on Medicaid expansion the other day.

It’s increasingly clear Alexander made some problematic choices which increase predicted costs.

The other day I noted a fatal flaw in the report. Because Alexander didn’t do an economic impact statement, he didn’t account for the effect of the new federal funds on Maine revenues. Pumping all that money into the Maine heath care system would have ripple through the Maine economy. Yet Alexander completely ignored that.

And now former state economist Charles Colgan is pointing to one of Alexander’s seriously flawed assumptions. Truth be told, this isn’t a hard one to identify.

In fact, a number of people without any special expertise noted it days ago. But this blatant issue has a significant impact on the predicted costs and Colgan nicely explains how weakly founded is Alexander’s assumption.

As Colgan points out, Alexander assumes much higher future poverty in Maine than anyone else ever predicted

Colgan spoke to reporter Steve Mistler. Mistler reports:

The analysis, part of the $925,000 taxpayer-funded welfare study by the Alexander Group, assumes that there will be a 33 percent increase in the number of Mainers living in poverty by 2020. . .

The poverty rate projection is important because the federal poverty level is the entry for people to qualify for Medicaid. Medicaid expansion would cover those who make less than 138 percent of the federal poverty level. The federal government would fully fund expansion for three years, before gradually drawing down to a 90 percent reimbursement rate by 2020. . .

In other words, if the study projects higher poverty rates, so go forecasts for ballooning Medicaid enrollment and state federal costs. 

Moreover, Alexander’s report does not meet normal standards for transparency, developing a case for why he made that assumption.

Colgan said there’s no written justification for the assumption in the report. Additionally, he said, the projected poverty rate increase is counter to economic trends, which assume that Maine, and the country, are rebounding from the Great Recession, albeit slowly.

“I’m just interested in seeing how he came up with that assumption,” Colgan said. “It’s not explained in the report. Normally when you have key assumption like that you explain how you arrived there.”

When an assumption is so out of whack with experts’ views, it’s especially incumbent on an analyst to make a convincing argument for those assumptions. But Alexander doesn’t.

By the way, you can see graphs from Alexander’s report showing his projected poverty rates for adults and children on pages 68 and 69 of the report. [Link here] His mid-range prediction for child poverty is a 35% increase.

A political note: It’s striking that Alexander’s view of the trajectory of the Maine economy is so very different from what Gov. LePage’s campaign contends. They say that Maine is on the move, with strong job growth.

Yet Alexander paints a very bleak picture of the Maine economy, with poverty rising by a third.

Moreover, because Alexander did not do an economic impact statement it would not be logical to say that poverty will increase so very quickly in reaction to expanding Medicaid. To make any claim about how Medicaid expansion will affect the economy, you have to do an economic impact statement. And Alexander never prepared an economic impact statement. So we are left with a big conflict, between the LePage’s campaign’s rosy view of Maine’s economy and Alexander’s rather grim one.

Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.