Last week, the Department of Health and Human Services granted Maine the first state exemption from a provision of Obamacare. The law requires insurance companies to spend at least 80 percent of their premiums on health care — and thus limit administrative expenses to 20 percent. But Maine insurers, under this new guideline, will be able to spend only 65 percent on clinical service. The Pine Tree State’s second largest insurer in the individual-policy market, MEGA Life and Health Insurance, threatened to pull out of Maine if the stipulation were enforced, so the department awarded relief through 2013.

Now, state senator Kevin Raye is requesting a second waiver. To fill Maine’s $4.3 billion budget gap, Gov. Paul LePage, a Republican, wants to adjust the state’s Medicaid program, MaineCare. Currently, the state has looser eligibility rules and fatter benefits packages than other states, and Obamacare orders the state to maintain those standards. If the state cuts them, it will lose all federal matching funds. So Raye, a Republican, recently spoke with Secretary Kathleen Sebelius about another waiver for Maine — this time on the Medicaid provision.

“It falls into the category of ‘No good deed goes unpunished,’” Raye tells NRO. “The law holds us to a standard that previous legislatures established. Now we have to cut other areas of state government that might be far less desirable to cut, but we’re left with no other choice.”

His Democratic colleague, state senator Margaret Craven, disagrees. “I haven’t seen that proposal [for another waiver] but I would certainly oppose it,” she tells NRO. “It certainly makes a very big difference for those people who are the poorest of the poor. It costs us a lot more in the end — in charity care, in hospitals’ providing inadequate care, and in using the ER to stabilize them but not provide ongoing care.”

Craven also targets Governor LePage’s proposed tax breaks: “Our governor has given a tax break to the wealthiest people in Maine and in this economy — at a difficult time — cutting school teachers and retired teachers’ benefits [is wrong]. I think that piece should be taken out of the budget entirely. We should certainly not take health care away from our most vulnerable.”

Raye chafes at the contention that his proposal would hurt the most vulnerable. “We’re not talking about the most vulnerable because the most vulnerable would be covered,” he says. “We’re talking about the expansion beyond what many states are covering.”

After speaking with Raye, Sebelius promised to send a team of experts to consult with LePage. Raye says that meeting has taken place — without the hoped-for results: “The options that the governor’s office was presented with really did not address the situation. They skirted around the edges. It was not what we had hoped for. It did not give us the flexibility in eligibility we wanted.”