AUGUSTA — A Maine Democrat has proposed to boost reimbursement to hospitals in the largely rural state while encouraging them to help pay off their employees’ student loans.

Senate President Troy Jackson urged lawmakers to support his legislation at a public hearing Friday.

“In rural Maine, hospitals are struggling to keep the doors open,” Jackson said.

Rural hospitals in Maine and nationwide are struggling to attract workers, finding ways to save money without shuttering and operating with losses — or just breaking even. Jackson pointed to hospitals in less-populated areas of Maine that have closed offices, scaled back services such as cancer care and obstetrics, and, in one case, filed for bankruptcy.

Jackson’s bill aims to waive the tax penalty when hospitals make student loan payments for health care employees. The bill also directs the Department of Health and Human Services to boost reimbursement to rural, acute care critical access hospitals and rural health clinics. Non-rural hospitals would get a smaller reimbursement boost.

Maine, where residents in rural areas tend to be older, sicker and have lower incomes, has finally begun to expand Medicaid to nearly 20,000 low-income residents as voters demanded in 2017 under former President Barack Obama’s health care law.

But leaders of several Maine rural hospitals, which received reimbursement cuts to help fund expansion under the law, said Friday that they don’t expect to see the biggest benefits for another few years. Medicaid and Medicare both offer a smaller percentage of reimbursement than commercial insurers, while Maine’s rural hospitals also provide $70 million in uncompensated care each year, according to the Maine Hospital Association.

“It is still a loss with Medicaid to treat those folks, but it is a better loss than treating them as uninsured,” said lobbyist Jeffrey Austin of the Maine Hospital Association.

Meanwhile, five rural Maine hospitals — including Calais Regional Hospital — received a federal grant this year to receive remote and on-site technical assistance for strengthening their business structures, community engagement efforts and partnerships with other hospitals in the state.

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