Maine Offers Lessons On Health Reform

States looking to implement their own riffs on universal health care would do well to study from the State of Maine’s playbook.  Maine, the first U.S. state to establish universal health insurance as a policy objective, is experiencing growing pains with its voluntary program.

Maine’s Dirigo Health Reform Act was ambitious and laudable: establishing universal health insurance coverage by 2009.  Where the voluntary program is running into problems, however, is in controlling costs.

The DirigoChoice plan is a privately run, publicly subsidized health insurance scheme for small businesses, the self-employed and individuals without access to employer-sponsored insurance (ESI)–especially the currently uninsured.  It gets its funding both from individual and employer contributions – but the part that was the most exciting was the idea of "savings offset payments.”  Assuming the Dirigo reforms are successful in reducing the number of uninsured, providers and insurers will enjoy savings due to lower bad-debt and charity care, which they are meant to pass on to the government.

It hasn’t quite worked out that smoothly or well, though.

According to a story on Forbes.com, the number of uninsured Mainers under 65 years old actually rose from 130,000 in 2004 to 141,000 in 2005, according to the U.S. Census Bureau.  It seems that complex benefit design deters people from taking up benefits and raises the cost of switching from their current provider.

“The lesson Maine appears to be teaching the country is that state ‘universal insurance’ plans will face significant challenges, particularly adverse selection problems that create unattractive risk pools for insurers, and cost issues,” the article concludes.