Maine Tries ‘Voluntary’ Socialized Health Care

Published May 1, 2004

While the most dramatic–and widely popular–trend in health care today is toward patient control over health care decision-making, state government officials in Maine appear determined to take their constituents down a path toward socialized medicine that few have tried and none has successfully navigated.

This summer, the state will begin enrolling residents in its health care program, called Dirigo–the state motto and Latin for “I lead.” The plan was championed by Governor John Baldacci, a Democrat who campaigned for election on the issue of national health care.

Uninsured Maine residents who elect to enroll in the program will get health coverage through private insurers at rates heavily subsidized by the state and participating employers.

Key questions raised during last year’s debate over the program remain unanswered: How much will it cost when fully in place? How many employers will participate? How much will they be required to contribute? And, perhaps most important, can the state pull it off as planned without a broad-based tax increase on individuals or businesses?

The Baldacci administration projects the program will cost roughly $90 million in its first year. Beyond that, the costs are unknown.

W. Tom Sawyer Jr., a Republican state senator from Bangor, has raised other questions, particularly about the program’s impact on health care providers and insurers now serving the state. “Will providers accept reimbursement at reduced rates?” he asks. “Will Anthem Blue Cross and Blue Shield remain in the state? Will insurance premiums go up by 4 percent? Can Dirigo Health achieve its goals with an acceptable expense ratio? Will the finest health care in the world now be rationed to reduce costs?”

The program seeks to fill the gaps between private insurance and Medicaid that leave 160,000 persons in Maine uninsured. It aims to enroll 31,000 persons this year. By 2009, all uninsured Maine residents would be given an opportunity to enroll in the program.

Failures Elsewhere

“Making something like this work anywhere is an experiment. And we will all learn in the process,” acknowledged Jay Wolfson, professor of public health and medicine at the University of South Florida. Howard Berliner, a health policy professor at New School University in New York City, agreed, noting “No other state currently has as far-reaching a plan as Maine.”

Other states have, however, seen efforts similar to Maine’s fail badly.

  • In Tennessee, Governor Phil Bredesen (D) has had to propose severe benefit cuts and copayments for beneficiaries in the state’s out-of-control TennCare program, which was projected to absorb 36 percent of the state budget in 2008. (See “‘Last Chance’ for TennCare,” Health Care News, April 2004.)
  • In Washington State, a plan similar to Maine’s Dirigo is one of the main drivers of a fiscal year 2004 budget deficit of between $60 and $85 billion. According to a 2003 report from the National Conference of State Legislatures, “the new budget includes a number of additional cuts in health care coverage, including elimination of state-funded health coverage for 60,000 low-income childless adults under the state’s Basic Health Plan.”

In November 2002, voters in Oregon overwhelmingly rejected a single-payer proposal that would have created a state government-run health plan covering 100 percent of Oregonians’ “medically necessary” health care costs. (See “Oregon Voters Rebuff Single-Payer Measure,” Health Care News, December 2002.)

Price Controls

Maine officials expect $52 million in one-time federal money to help cover the program’s start-up costs.

Beyond that, the program will be funded on an ongoing basis through the payments made by employers who choose to participate in order to provide health coverage to their workers. The state also projects it can redirect to Dirigo $80 million in cost savings per year–achieved by eliminating un-reimbursed medical costs run up by uninsured people and persuading hospitals and providers to impose price controls on medical services.

The uninsured who are unemployed, or whose employers do not participate in the program, will be required to pay premiums in order to get coverage through Dirigo. State sources were unable to provide Health Care News with an estimate of how high those premiums might be. Information developed in 2003 by the state indicates only that premiums will be charged on a sliding scale based on income, with eligibility for the program extended to those earning up to 300 percent of the federal poverty level: $26,000 for a single insured or $55,200 for a family of four.

In addition to launching the new Dirigo program, Maine will open its Medicaid program to cover more poor people. The state also has a prescription drug program, Maine Rx, that requires drug companies to offer discounts on prescription drugs provided to the elderly, working poor, and others.

What Lies Ahead

Richard Batt, president of the Franklin Community Health Network, warned “Maine government cannot create a central control system that will work effectively to make decisions that are so complicated–socially, technologically, and financially–and that matter so much to patients and communities.”

He predicted “it will be extraordinarily damaging to health care in Maine if Dirigo Health legislation is passed, goals are not met, and we move towards state government control over rationing of health services, capital, prices, and profits.”

Merrill Matthews, director of the Council for Affordable Health Insurance, also warned of potentially dangerous unintended consequences. 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.”

With Dirigo Health in place, he predicted, “not only Canadians will be traveling south, but Mainers will be joining them–heading to New Hampshire.”

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].