The two-year budget proposal from Gov. Janet Mills includes new fees and taxes on prescriptions and ambulance profits that drew initial outrage from Republicans and other critics, but Maine’s pharmacy and ambulance groups are making measured statements on them.
The Democratic governor’s $11.6 billion budget proposal calls for pharmacies to pay a 70 cent tax on each prescription they fill and for private ambulance service providers to pay a 6 percent tax on annual operating revenues. The state would use the new money to boost MaineCare reimbursements amid funding issues for the state-run Medicaid program.
Republican lawmakers quickly criticized the plan as burdening pharmacies, ambulances and patients with higher costs, but the Mills administration noted the new taxes can unlock additional federal funding that would neutralize the changes while not passing them onto consumers.
Trade groups that represent Maine’s pharmacies and ambulance companies said their members are worried the new changes could hurt them if not implemented properly following years of struggles. The Maine Monitor reported last year a tenth of the state’s pharmacies closed in the past decade to bring the total to around 280, while rural ambulance services have faced uncertain funding and staffing challenges that lawmakers have repeatedly studied.
The spending plan will face hearings and scrutiny in the coming weeks while it also proposes higher taxes on cigarettes and other products alongside cuts to health programs that Mills said will balance the budget and allow for sustained investments in schools and towns amid a projected $450 shortfall. Mills said she rejected income and sales tax increases in addition to not touching the state’s hefty rainy day fund.
“The immediate reaction from our members was alarm and concern,” Amelia Arnold, the Maine Pharmacy Association’s legislative liaison, said Wednesday.
Arnold said pharmacies are trying to approach the proposed 70 cent fee “with an open mind” given the revenue neutral explanation from the Mills administration, but Arnold also said pharmacies that prescribe smaller amounts of MaineCare-funded prescriptions feel they may not benefit as much from the change.
Joe Bruno, a former Maine House Republican leader, owns eight pharmacies in the state through his Community Pharmacies firm. He is acquiring a ninth pharmacy in Rockport next month but said he would not have bought it if he knew sooner the prescription fee was coming.
“A lot of people are having a hard time staying afloat right now,” Bruno said.
Department of Health and Human Services spokesperson Lindsay Hammes said the federal government allows states to raise additional revenues and then reinvest those dollars back into reimbursing providers while unlocking more federal dollars.
“That is what the budget proposes to do here,” Hammes said, adding the governor’s budget would ultimately offset the new costs for pharmacies and avoid higher prices for patients as the state budget would see $6 million in savings.
The Maine Ambulance Association previously told a state commission on emergency medical services to implement a 6 percent tax on private ambulance services and combine it with a two-thirds federal funding match to save providers who have operated at a loss while MaineCare reimbursements cover about a quarter to 30 percent of their costs.
But the governor’s plan would redirect the new federal dollars to offset other MaineCare shortfalls, said Butch Russell, the association’s executive director. The group wants Mills to put the new state and federal revenue “exclusively to supporting ambulance services,” he said.
“Redirecting the federal match to other areas will leave ambulance providers struggling to survive, putting public safety at risk,” Russell added.
