AUGUSTA — Over a year ago, Franklin Memorial Hospital announced that it was laying off nearly 40 employees, citing a 338 percent increase in free care provided to patients who have no health insurance.

Gov. Paul LePage cited the financial pressures facing hospitals in urging lawmakers to enact his bill to repay the state’s $183 million share of backlogged Medicaid payments to providers. The outcome showed Maine’s 38 hospitals wield significant influence in the Legislature and in lawmakers’ home districts.

Now, majority Democrats and several Republicans hope hospitals can provide a similar boost to expansion of Medicaid, known here as MaineCare. Hospitals argue that extending Medicaid will help keep rising charity care costs in check.

So far, however, the odds of expanding Medicaid coverage to an estimated 60,000 to 70,000 people earning as much as 133 percent of the federal poverty level – just over $15,558 a year for an individual – appear ominous.

Republican leaders who last year blamed the layoffs at Franklin Memorial on stalling by Democrats on the governor’s reimbursement plan are now challenging hospital claims that broadening Medicaid will make them more financially stable.

Maine hospitals are pressing lawmakers to support a compromise bill co-sponsored by moderate Republican Sens. Roger Katz of Augusta and Thomas Saviello of Wilton. The bill would also install a managed care system to reduce costs in a $2.5 billion state program currently serving 320,000 people.

Saviello has said that one of the primary reasons he supports Medicaid expansion is that the hospital in his district – Franklin Memorial – wants it.

Rebecca Arsenault, Franklin Memorial president, said the bill is critical to controlling charity care costs that have climbed to $22 million over the past two years.

Other Maine hospitals, 11 of which are among the state’s top 30 employers, are making similar arguments. Charity care and bad debt from uninsured and unpaid hospital visits has risen to more than $400 million, up from over $100 million in 2000, according to the Maine Hospital Association. Maine hospitals are also expected to lose $730 million in Medicare reimbursements by 2022 because of a now obsolete 2009 deal struck by the American Hospital Association and the drafters of the health reform law.

Such statistics, combined with the hospitals’ roles as employers, have helped tip the scales in the 26 states that have so far chosen to expand Medicaid enrollment. But the hospitals’ argument in Maine has been met with more resistance by Republican lawmakers wary of expanding a program that they oppose philosophically and because of its history of budget overruns.

Rep. Lance Harvell, R-Franklin, for example, has been urged by Arsenault to support expansion. She believes she has a compelling case: Franklin Memorial serves a broad, rural area with relatively high numbers of elderly and impoverished patients, and relatively high unemployment.

“These are people that really need care,” she said. “These are not people abusing the system.”

Harvell counters that lawmakers have many spending priorities.

“I’ve told them that just because you were at the front of the line last year doesn’t mean that you’re at the front of the line this year,” he said, adding that Franklin Memorial Hospital received $15.4 million through the reimbursement bill last year.

Although the Katz-Saviello proposal was designed to draw more Republican votes to Medicaid expansion, it has already lost the support of one Republican lawmaker who supported a stripped-down proposal last year that fell three votes short of overcoming LePage’s veto.

Business groups are either opposing the bill or staying out of the fight. The Maine State Chamber of Commerce, which was involved in the compromise bill negotiations, announced Monday that it’s staying neutral. The chambers of commerce in Bangor and Androscoggin County are supporting expansion.

Jeff Austin, the lobbyist for the Maine Hospital Association, believes hospitals have a compelling argument for expansion: Health care providers have already agreed to reimbursement cuts to help pay for it.

In 2009, the American Hospital Association supported President Obama’s Affordable Care Act, accepting $155 billion in Medicare reimbursement cuts over 10 years in exchange for a provision in the act mandating that all 50 states expand Medicaid, which is expected to provide more paying patients and reduce the need for charity care.

But the deal unraveled when the U.S. Supreme Court in 2012 struck down mandatory Medicaid expansion and made it optional for states.

“Hospitals cannot afford $30, $50 and $100 million annual cuts in Medicare without the beneï¬t of Medicaid expansion,” Austin told the Health and Human Services Committee.

Republican opponents of expansion have questioned the financial benefits to hospitals.

“Why would hospitals want to expand when they’re here (at the State House) every year complaining about reimbursement rates?” said Senate minority leader Mike Thibodeau, R-Waldo. “Why wouldn’t they want people to buy private insurance?”

A provision in the Affordable Care Act allows individuals making more than 100 percent of the federal poverty level – about $14,000 per year – to qualify for subsidies to purchase private insurance for as low as about $5 per week.

Thibodeau and other expansion opponents also question claims by hospitals that broadening Medicaid coverage will reduce charity care costs. Maine expanded Medicaid in 2002, yet charity care costs are still increasing, they say.

Austin said the number of charity care cases increased for other reasons, including the recession.

“There is no credible argument that covering 70,000 people without insurance will not impact charity care. Doesn’t make sense,” Austin said. “That said, if the question is what will happen over the next 10 years regarding charity care, I don’t know for sure because of the other factors in play. But expanding coverage will no doubt help hospitals deal with the impact of poverty, including charity care.”

Austin’s arguments and those of individual hospitals are making their way to state lawmakers. But it’s unclear if the points are persuasive enough for Medicaid expansion to pass and overcome a veto.

Steve Mistler can be contacted at 791-6345 or at:

smistler@pressherald.com

Twitter: @stevemistler