Maine Governor John Baldacci’s universal health care proposal attracted the attention of experts from across the country … but their reviews were not the glowing ones the governor sought. Like the program’s Pine State critics, outside observers warned the program would be costly and ineffective.
“Billboard for Adverse Selection”
“The proposal includes tax-financed subsidies for everyone with incomes below 300 percent of the federal poverty level or $45,750 for a family of three,” explained Greg Scandlen, director of The Galen Institute’s Center for Consumer Driven Health Care. “Yet the median household income in Maine is $37,240.”
The state “seems to think it will pay for the subsidy by ‘recovering’ millions in freed-up money from bad debts caused by unreimbursed care for the uninsured,” he continued. “But the subsidy isn’t confined to the previously uninsured. It is available to everyone meeting the income threshold–well over half the state population.”
Morever, suggests Scandlen, “The program is a huge billboard for adverse selection. It provides no incentive for people to sign up while they are young and healthy, but allows them to wait until they know they need services before enrolling. There is no waiting period for pre-existing conditions, and though the report doesn’t specify premiums, it will presumably be community-rated, meaning everyone pays the same premium regardless of risk factors such as age.”
Scandlen warns, “Healthy people can decline to get coverage, knowing that if they ever get sick they can be covered immediately at no extra cost. There is absolutely no advantage in pre-enrolling, especially not if the employer pays only 60 percent of the cost of coverage, leaving another 40 percent for the worker to pay. With the younger people out of the insurance pool, premiums will skyrocket, making coverage unaffordable for everybody.”
“Awesome Delegation of Discretionary Authority”
Lee Tooman, vice president of government relations for Golden Rule Insurance Company, told Health Care News, “Say what you want about last year’s effort in Oregon to pass universal health care–at least you knew what you were voting for.
“By contrast, Maine’s bill represents an awesome delegation of discretionary authority to unelected agency bureaucrats. The bill empowers the government in an unprecedented way to manipulate both the health care delivery and health care financing systems in the state.
“A long time ago,” Tooman confides, “an actuary told me there are only two scenarios in which community rating works: either you force people to buy the insurance or you subsidize it so heavily people would be foolish not to buy it. Maine is going to try subsidies first. My guess is this will not work and the next step will be an employer mandate.”
Tooman concluded, “One of my favorite provisions of the bill says that, to the extent necessary to formulate a proposed plan allocating costs and services, such collaboration must displace competition in affected health care markets. Sounds like command-and-control regulation to me. A mini-version of national health care.”
New Hampshire the Next Haven?
Merrill Matthews, director of the Council for Affordable Health Insurance (CAHI), sees other potential consequences of the Dirigo Health Plan. He told Health Care News, “Even though Maine is next to Canada, and gets a lot of business from Canadians coming south of the border to get care they can’t get in Canada, the governor and state legislature haven’t learned a thing. Were the state to actually implement the plan, not only Canadians would be traveling south, but Mainers will be joining them–heading to New Hampshire.”
Matthews predicts, “The universal portion of the plan will never be implemented because it is unworkable and unaffordable, a fact Governor Baldacci will be admitting in a few years … if he is still in office.”
Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].
