Dirigo’s lessons for national health care reform
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Dirigo’s lessons for national health care reform


Maine’s Dirigo experiment has been a costly failure
Tarren Bragdon

There are many well intentioned people across America advocating a “public option” or Washington-centered health care reform. As they continue their campaign, proponents should examine what has happened in Maine. We can share our extensive experience with a government option experiment of our own: Dirigo.

The similarities are striking.

Advocates begin their arguments for a government option plan by promising this idea is not socialized medicine, and it will work alongside private insurance companies already in the market. The government option would create a new Washington bureaucracy to develop, market and control new government health plans to compete with the plans offered by existing private insurers, allowing consumers to choose between the established private companies or a new government-run plan.

Government option proposals rely heavily on the assumption that a new government agency is more efficient than a for-profit or not-for-profit private insurance company. They promise that a new national bureaucracy will offer competitive, comprehensive health plans that cost less. Proponents admit that a government option will require significant taxpayer dollars during the startup phase, but will reach a break-even point quickly because the new government health option will be popular.

In fact, proponents argue, the government option policies will be such a perfect combination of low prices and outstanding coverage that previously uninsured people will see the benefit of buying this coverage and voluntarily do so.

Government option advocates also maintain that, because Washington-issued plans would cover so many previously uninsured people, the overall costs associated with health care will fall. These savings will be passed along to the government option policyholders or kept in the pockets of the for-profit private insurers.

The same arguments were made in Maine in 2003 when Dirigo Health was first enacted.

Dirigo Health was established using $53 million of one-time federal money. It was supposed to become a national model that would inspire other states to enact a similar government program. After that, it was to be a self-sustaining agency that sold and operated its own health plans. Funding would come from premiums paid by policyholders and through an assessment of the savings realized by private insurance companies when providers lowered their costs due to the projected drop in uninsured Mainers. Dirigo’s supporters promised the new government program would cover Maine’s 128,000 uninsured people by 2009. If those with lower incomes had trouble affording the monthly premiums, subsidies would be available. No new taxes would be imposed to pay for the government option.

Six years later, what are the results?

At launch, Dirigo limited enrollment so this new state agency could handle the demand for a new government plan. While Dirigo was promoted as an option for the uninsured, for every uninsured person voluntarily enrolling, two people switched from private coverage to government-subsidized Dirigo. Costs skyrocketed and the uninsured rate remained relatively flat.

Despite enthusiastic press coverage and continual promotion by state leaders, the initial enrollment in Maine’s government option policies was disappointing and things never improved at Dirigo. Due to financial instability, Dirigo’s enrollment has been closed since September 2007.

At its highest level of enrollment in September 2007, only 15,000 Mainers were covered by Dirigo. Today, only 9,630 Mainers are enrolled, and of those, just 3,467 were previously uninsured — less than 3 percent of the 128,000 people this government option was designed to insure.

The Dirigo government option was to be financed by capturing the theoretical savings the government caused through an assessment on private insurance plans and self-funded group plans. This “Savings Offset Payment” was essentially a tax on private insurance to help pay for a government option program that was supposed to reduce insurance costs. An attempt to get away from this controversial idea by raising taxes on beverages and insurance claims was soundly rejected by Maine voters last November. At Gov. John Baldacci’s request, a majority of the Legislature just voted to dump this elaborate but intellectually suspect annual calculation of Dirigo savings for a straight tax on health insurance claims.

Maine’s Dirigo experiment has been a costly failure. Dirigo’s government option has not covered the uninsured. Dirigo’s government option has resulted in a new tax on the hundreds of thousands of Mainers struggling to afford private coverage.

Dirigo is Maine’s motto and is Latin for “I lead.” For Congress, Maine’s Dirigo experiment can lead by example of what not to do.

Tarren Bragdon is the chief executive officer of The Maine Heritage Policy Center. He will be at a series of federal health reform presentations including on Friday, June 19 in Bangor. See www.MainePolicy.Org for a full listing of these statewide events.

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Comments
8 comments on this item

Tarren Bragdon- The editorial you have written is by far the best researched editorial that I have read in the BDN. The end opinion is based on facts and data and then reaches a sound logical conclusion. The rest of the BDN editorial staff could certainly learn a lesson from your example.

Bragdon of course has been an outspoken critic of Dirigo from the outset. It is always easier to tear down any well-intended effort than to offer a practical alternatives. He conveniently forgets that Dirigo was meant to serve not only the uninsured but also the under-insured, of which there are many. Sure, Dirigo is far from perfect but If the Maine Heritage Policy Center can find a cost-effective way to provide even minimal health insurance for Mainers with pre-existing health conditions and Maine families living below poverty income levels, working for employers who cannot afford to offer health insurance coverage, let it step forward. Does Bragdon not realize the obvious, that we pay one way or another? We either subsidize care through taxes of some sort or through our currently super-inflated insurance premiums. It's just that the latter method is far more expensive as a direct consequence of delayed reporting of illness, delayed treatment and inappropriate use of emergency medical facilities and other resources.

I think you are correct that the federal government could /should learn a lesson from Maine's Dirigo exercise. I just don't think we are thinking of the same lesson. What Dirigo has shown is that 'baby steps', or working 'within' the current for profit health care system won't work. National health care needs to replace the current broken system.

National health care needs to cover everyone in order to insure that everyone has health care and there is a broad stable base to pay for it. Dirigo didn't.

National health care needs to be accepted by everyone (all hospitals, doctors, pharmacies). It needs to be able to negotiate lower prices for drugs and testing. In order for national health care to work it needs to focus on keeping healthy people healthy and healing sick people. Health care providers should be in the business of helping people not making huge profits on the suffering of ourselves and our neighbors. There should be _no_ private health insurance industry. They are there to siphon our health care dollars into their coffers. They help drive up the cost and reduce the quality of health care. Like any for profit entity, their goal is to maximize their personal profit. If that means denying basic testing, so be it. If the odds are that most people won't need expensive catastrophic coverage or that they'll loose this coverage before they do, it makes economic sense for them to play the odds. The fact that potentially millions of people will end up suffering needlessly isn't their concern. In other states it's fairly common for health insurance carriers to deny coverage for 'preexisting conditions', or to drop coverage should you ever get sick. A more pedantic concern is the fact that insurance companies will use any pretext to deny coverage, something as simple as not filling out a form correctly, or in the right order. Doctors have to incur the needless expense of hiring people just to navigate the myriad private insurance forms. Make a mistake, don't get paid. Needless friction and the extraction of health care dollars that should be spent on the health of our fellow citizens.

Health care needs to focus on providing for healthier people. No child should forgo immunizations because of a lack of coverage, or the byzantine rules of their health care insurance (Ex: If your doctor has shots on hand, they are covered no extra charge. If you have to go to a pharmacy and get the immunization before your doctor can administer it, say you have a smaller family physician, you are charged an additional $40). Monitoring cholesterol or high blood pressure, treating diabetes or asthma, these can be fairly cheap and effective to manage. Unfortunately it isn't in a private insurance company's best financial interest to do so.

I haven't even begun to touch on the secondary costs of our broken system. The needless loss of productivity and the loss of corporate competitiveness as US companies either don't provide any coverage or pay an increasingly higher cost to cover their employees. Something that companies in Japan, or France, or any other first world industrialized nation doesn't have to contend with.

Ironically, I have read that Sen. Snowe is against public sponsored health care as being not _good_enough_. It's ironic in that all of our legislators and even the president himself are covered under a _public_policy.

We need national health care, not a nationalized health insurance policy. If Dirigo taught us anything it should be that public health insurance is doomed to fail. Public health care is what needs to occur, not insurance, assurance. There a three (3) things it will need to succeed. 1) It must cover every man, woman, child in the county. 2) It must be accepted by every health provider in the country, by law. 3) It must be paid for by a broad based tax on all sources of income, similar to income tax. If we can start there we have a chance.

There are powerful people making buckets of money in the current dysfunctional system. Don't expect them to go quietly into the night. If someone's against public health assurance, ask yourself do they stand to make or loose money under a public health care system.

Remember even our seminal documents declare that we have the right to "Life, liberty, and the pursuit of happiness". Access to health care is a right, not a privilege. Until we reform our system we will continue to suffer through a system where how much health care you receive is more a matter of the depth of your bank account as opposed to the extent of your suffering.

Pizanos the $300 million that was WASTED on Dirigo could have insured alot more than 10,000 people if it had been done wisely, they kept on trying to make a broken concept work and then started to tax health insurance claims to make up the rest, it is no wonder this guy opposed Dirigo.......because it was a stupid idea put in place by stupid governor and legislature. Any more questions?

If medicare and maine care paid 100% of the charges, private insurance would reduce 40% and cost shifting would stop..

Started reading Pizano's comment and came to a screeching halt at the words, "well-intended." A well-intended government program, Pizano? Well-intended for some at someone else's expense, you mean. Ergo, you're an income redistributionist, i.e.: socialist.

I on the other hand want government out of everything. Particularly health care, as let's face it---the government has screwed up retirement, education, infrastructure, the dollar, immigration, the drug war, the courts, the jails, the postal service, our roads, and on and on and on... Now we're gonna trust government with health care?

Do me a favor and move to Canada for six months, Pizano. Why not test your love of government run health care where it already exists?

Kudos to Bragdon for a timely opinion piece.

Mr Bragdon's cogent and well researched article will not sit well with those who revel in the false notion that the American health care system is a pool of misery in need of radical undoing.

Thank you Mr Bragdon for your clear minded words.

Ike Morgan

Exeter, Maine

Somebody at the BDN had to of been canned for letting the TRUTH slip through....

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