Gov. Paul LePage said Friday he will not implement a state-customized insurance exchange or participate in an expansion of Medicaid for an estimated 37,000 uninsured Mainers.

LePage called the federal health care law provisions the “degradation of our nation’s premier health care system.”

Both moves were met with disappointment, but not surprise, from the incoming Democratic legislative majority. The presumptive Democratic House Speaker, Rep. Mark Eves, of North Berwick, and Senate President-elect Justin Alfond, of Portland, said the governor’s decision was a missed opportunity, partly because the federal government would pay for 100 percent of the Medicaid expansion from 2014 to 2016 and 90 percent after that.

It’s unclear what specifically Democrats can, or will, do to blunt the moves. However, Alfond predicted that a flurry of bills related to the Affordable Care Act will await lawmakers next session.

LePage’s decision on the exchanges — online marketplaces for individuals and small businesses to shop for private coverage — was anticipated. His administration and the outgoing Republican legislative majority stalled exchange implementation long enough that even supporters are wary of hastily cobbling one together by the October 2013 deadline.

According to an analysis by the Kaiser Family Foundation, states that run their own exchanges or partner with the federal government will have more control over which coverage plans will be available to consumers. Additionally, states can customize the plans to their residents’ health care needs.

Last year, an advisory panel comprising insurers and hospitals unanimously recommended that the state create its own exchange.

“With a federally run exchange you don’t know what plans are going to be in it,” Joe Bruno, a former Republican lawmaker who became chairman of the advisory committee, said Thursday. “You could end up with something cookie-cutter that just doesn’t fit here.”

Eves said lawmakers would use the upcoming session to plan for a future state-based exchange.

LePage is unlikely to support such efforts, but Eves noted that there was widespread support among Republicans and business leaders for a state-run exchange.

Incoming Republican House leader Rep. Kenneth Fredette, of Newport, said he expects Democrats to submit bills advocating for a state-based exchange and that Republicans would evaluate each one. When asked if he supported a state-based exchange, Fredette said he wasn’t opposed to one, but couldn’t definitively say he would support one without first seeing the details.

Eves was hopeful Republicans would work with Democrats.

“The initial conversations I’ve had with Rep. Fredette is that we are all approaching this in a similar manner,” Eves said. “We have to figure out a way to get things done in general, so this could be a good place to start.”

Circumventing LePage’s decree on Medicaid expansion could prove more difficult. Republicans generally believe that the taxpayer-funded program is inefficient and a state budget buster.

The Obama administration and local Democrats argue the expansion makes sense politically and financially.

Originally, Medicaid expansion was a mandatory provision of the Affordable Care Act. The U.S. Supreme Court this summer struck down the mandate, but millions in federal money remains for states that proceed with expansion.

Eves said that foregoing expansion effectively means that Maine would subsidize health care coverage for other states that allow the federal government to cover more of their citizens.

“In fact, we would be exporting our tax dollars to provide health coverage for people in any other state that decides to adopt the Medicaid expansion,” he said. “Beyond the 100 percent the government will pay for the first two years, the feds will pay 90 percent after. That is a bargain when you’re talking about paying for thousands of people’s health care. It’s a bad business decision to forgo that coverage.”

LePage isn’t the only governor to pass on Medicaid expansion. Six other Republican governors have said definitively that they’re taking a pass, while five others are leaning in that direction, according to an analysis by The Advisory Board Company.

Maine could become the only holdout in New England. New Hampshire has indicated that it’s a likely participant, while Massachusetts, Connecticut, Vermont and Rhode Island have already committed to expansion.

States that agree to expansion would extend Medicaid eligibility to nearly all individuals with incomes up to 133 percent of the federal poverty level. A single person earning as much as $14,856 a year would receive health insurance, and a family of three earning as much as $25,390 would be covered, according to statistics compiled by the Kaiser Family Foundation.

Advocates for expansion argue that increased Medicaid eligibility saves money because it would discourage needy residents from getting charity care in hospital emergency rooms. Charity care is often funded through higher premiums for those with private insurance.

Charity care is also a concern for hospitals.

Uncompensated care — health care costs that hospitals absorb because people can’t or won’t pay — soared from a total of less than $5 billion to nearly $40 billion from 1980 to 2010, according to the American Hospital Association.

Uncompensated care by Maine hospitals has doubled over the last five years, from $94 million to $194 million.

It’s unclear if LePage’s decision is supported by the Maine Hospital Association, the trade group representing Maine’s hospitals. A spokesman for the group did not immediately return a call seeking comment.

Jeffrey Austin, a spokesman for the group, said in July that increased Medicaid eligibility would decrease costs for uncompensated care, but hospitals often end up paying for expanded Medicaid programming through reduced federal reimbursements.

However, at the time, Austin said the association may still end up advocating for the expansion.

Steve Mistler — 791-6345
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