For a glimpse of what universal health care might look like, come to Maine, the first state to launch a bold experiment in health insurance for all. More specifically, travel to Warren, a small town a world away from the luxury summer homes of Bar Harbor. That's where Joan Donahue lives. She's a 40-year-old divorced mother of two and a registered nurse who grew up using Medicaid, the federal insurance for the poor. Three years ago she risked her climb into the middle class by cashing in her retirement account and starting a business, Hummingbird Home Care. Donahue couldn't possibly afford health insurance, either for her family or her few employees, and banned her teenage son from risky sports. "One broken bone would have wiped us out," she says.
So Donahue was more than eager to become an early adopter of Maine's grand experiment. Governor John E. Baldacci started lobbying for universal health care on his first day in office in 2002; a year later, the state legislature overwhelmingly passed the Dirigo Health Reform Act. (Dirigo, the state motto, is Latin for "I lead.") It went into effect on Jan. 1, 2005, featuring a health insurance plan for individuals and small businesses, with coverage available to all and subsidies based on income.
Baldacci's far-reaching plan aims to cover the uninsured, cut health-care costs, and improve quality all at the same time. But compromises had to be made. To reassure free marketers that this wasn't a Big Brother-like program, enrollment was voluntary. And a funding plan was devised that would have Dirigo pay its own way by recapturing any savings accrued to the health-care system from covering the uninsured.
With Dirigo's subsidies, Donahue was able to cover her family and offer insurance to her five employees at a cost of $288.38 per month for each. Three signed up, paying 40% of the premium, and Hummingbird is picking up the rest. The other two, though, found the plan still too costly. And therein lies the problem—even when insurance is subsidized, some people cannot, or will not, pay.
That's just one of the crucial lessons Maine's experiment holds for the many states and Presidential candidates trying to find solutions for covering the 47 million Americans who are uninsured. But the key lesson may be that no matter what the plan, getting to universal coverage will be a problem-strewn slog.
Two years after Dirigo went into effect, 13,500 Mainers have enrolled. That's enough to help bring Maine's uninsured rate down from 14.5% pre-Dirigo to 12.5% in 2006, making it the only state to lower its percentage of uninsured over the five-year period. But Baldacci had projected 31,000 enrollees in its first year, with all of Maine's 130,000 uninsured covered by 2009. The shortfall is grist for the plan's enemies, who complain it is too costly and too complicated.
Outside the state, policy experts say criticism of Dirigo can't negate Maine's most significant accomplishment: It is the first state in over a decade to attempt to solve the uninsured crisis. "I give them a lot of credit for being the leader. That's very tough," says Karen Davis, president of the Commonwealth Fund, a nonprofit that studies health-care. "You see elements of Maine's [plan] in all of the other state proposals as a result."
Later this year, Massachusetts and Vermont will roll out their own universal coverage initiatives, while the governors of California and Pennsylvania announced sweeping proposals in January. Several more states are trying piecemeal reforms, and last month the National Governors Assn. created a Health Care Working Group to come up with an action plan to support state efforts.
In some ways, Maine's system is more innovative than these proposals; in other ways less so. On the plus side, Dirigo is the only plan that addresses rising costs. Health spending is an unsustainable 18% of Maine's gross domestic product. Baldacci got the state's hospitals to voluntarily cap price increases at 3% during the first year of the plan; the state also placed stringent limits on hospital spending.
Health care inflation could doom those plans that duck the issue. "You simply can't have universal access without addressing cost," says Paul B. Ginsburg, president of the Center for Studying Health System Change. "Massachusetts doesn't have any cost containment, and they are either going to have to address this issue very soon or else spend a lot more money to ensure affordable coverage."
But Massachusetts has taken a major step beyond Maine by mandating that all residents get insurance. As Dirigo has proven, voluntary enrollment makes it a lot tougher to get to universal coverage. Even without mandates, however, Dirigo's enrollment has been a bust more in perception than reality. Dirigo Choice is in fact the fastest-growing insurance policy ever offered in Maine. To get 13,500 signups in two years in a sparsely populated, relatively poor state is considered a success in the insurance industry.
The most vociferous complaints about Dirigo are about money—specifically, how much coverage costs and who has to pay for it. The insurance is offered by Anthem Blue Cross & Blue Shield, which already covers more than 80% of Maine's policyholders. Anthem's market dominance gave the state little bargaining power when it came to negotiating premiums, and lots of Maine's low-income uninsured consider Dirigo still too costly.
As for funding, Dirigo started with a one-time, $53 million infusion from the state. Ongoing costs are to be met by a controversial annual payment from the state's insurers, including large companies who self-insure their employees. Currently, Maine hospitals have to charge higher prices across the board to make up for the more than $200 million they incur each year in bad debt and charity care. Dirigo assumes hospital prices will decline as the uninsured get health insurance and rather than have the insurers pocket the difference, the state wants the savings paid back.
Maine's Superintendent of Insurance calculated the savings payback as $43.7 million for 2005 and $34.3 million last year, and insurers immediately filed suit, charging those amounts were too high. They have yet to prevail legally, but the offset payments may be too controversial to continue. Baldacci set up a commission last year, with many of Dirigo's enemies as members, to come up with alternatives. "We've come a long way in four years, and I realize we have to do things differently now," says Baldacci. "But I put my harshest critics at the table to work out a solution. They all live here, and they all want to do the right thing."
Agreeing on the right thing won't be easy. In January the committee recommended new taxes on alcohol, cigarettes, and snack foods to fund Dirigo, riling antitax groups. And in late March, Baldacci suggested the state could save money by ditching Anthem and insuring residents itself, raising cries of "socialized medicine" from conservatives.
Then there are those who think Dirigo is just a lousy plan. Richard A. Bennett, CEO of the Corporate Library in Portland, has 29 employees and views Dirigo as a poor alternative to the "very good set of benefits" he offers now. As a former Republican state senator, Bennett voted against Dirigo. "This has become a very, very expensive commitment," he says. "I just don't see a need to continue pushing this experiment."
To many of Maine's smallest businesses, it's an experiment that meets their most desperate need. At the recent Maine Fishermen's Forum in Rockport, some 40 people crowded into a seminar to hear about insurance options, far more than attended many other sessions. "It is absolutely the biggest issue facing our members," says Sebastian Belle, director of the Maine Aquaculture Assn.
'WE CAN RELAX A LITTLE'
Aquaculture—fish farming—is a tough business that can easily go a year without any profits. That was the case for Eric Horne and Valy Steverlynck, two of the iconoclastic entrepreneurs that Maine tends to attract. The couple left their corporate jobs in Boston in 1999 to start an oyster farm in Freeport, Eric's hometown. It takes three years to establish an oyster farm, and they couldn't begin to afford the $1,500-a-month insurance premium Blue Cross would have charged to cover themselves and their two young sons. "We came back because we wanted a lifestyle change, but to be honest, the insurance thing made us question our decision," says Horne. Last year they signed up for Dirigo, paying a subsidized $200 a month. "We can relax a little now."
As for Joan Donahue, she recently got her first physical in years thanks to Dirigo, which pays 100% of preventive care and screening. She also turned into an activist. When opponents escalated their attacks against Dirigo last year, she drove to Augusta and testified before the state legislature, unbidden. "I was appalled by all the negativity from people who already have health insurance," she says. "I don't know how they can tell people like me that Dirigo has failed."
By Catherine Arnst