Six years after Maine created what many hailed as an innovative public health care initiative, the plan has failed to live up to its goals.
In 2003 Maine passed the Dirigo Health Initiative with the intent of providing coverage for all of Maine’s uninsured by 2009 without requiring any new taxes. It was expected to be paid for entirely by savings in Maine’s health care system.
“Instead of saving money, the Dirigo Health Initiative has cost taxpayers $155 million over five years, and that’s just in subsidies and administrative costs,” said Tarren Bragdon, president of the Maine Heritage Institute in Portland. “While the plan was touted as a solution to covering all of the state’s uninsured by 2009, instead it has covered only 3 percent of Maine’s uninsured population.”
High Costs
The initiative included a subsidized public option insurance program, designed by the state government and administered by a private insurer. Taxpayer dollars were used to pay for the plan, and it was marketed by the state.
After six years, Maine has spent more than $155 million to cover just 3,400 uninsured enrollees, and Bragdon says enrollment is projected to drop further.
“Dirigo Choice premiums increased four times faster than the Maine State Employee Health Plan premiums,” said Bragdon. “Dirigo has also led to significant crowd-out of private insurance. Only one-third of Dirigo Choice enrollees were uninsured at the time of purchasing the government plan. Dirigo had a crowd-out rate of 64 percent.”
Because of the subsidized plan’s high costs, the state had to close it to new enrollees in 2007.
Larger Lessons
Also in response to high costs, “the Dirigo Health Agency has cut benefits in recent years” and shortchanged providers, Bragdon said. “Dirigo Choice paid only 72 cents in medical claims for every dollar in premiums collected.”
Christie Raniszewski Herrera of the American Legislative Exchange Council in Washington, DC says Dirigo’s failure provides larger lessons.
“The government will not ‘compete’ unless it can change the rules to win,” Herrera said. “In the case of any public option plan, government will serve as both a regulator and a competitor. This defies the meaning of competition.”
John LaPlante, editor of StateHouseCall.org, agrees the Maine example is very instructive.
“It reminds us of why federalism is so valuable,” said LaPlante. “Maine has engaged in a costly experiment that has fallen far short of its goals. That is bad for the people of Maine, but those of us who live elsewhere can be thankful we haven’t yet been subjected to something like this.”
Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.
