State Takes on Health Care Crisis
Officials seek benefit for all residents
FREEPORT, Maine - It might seem an unlikely venue for groundbreaking health care reform, this relatively poor, rural state of rocky coasts and quaint harbors, grassroots politics and rugged individualism.
But people here are more practical than ideological. Their health care system was in deep trouble. They got tired of waiting for the federal government to help families with limited incomes get affordable health insurance and senior citizens get affordable prescription drugs.
So Maine took on the health care crisis, enacting some of the most ambitious health care laws in the nation at a time when most states are cutting services because of budget deficits.
One measure, effective in January, aims to offer prescription drug coverage to about 275,000 people with low to moderate incomes by pressuring drug manufacturers to reduce prices.
The other set of laws, effective in July of next year, foresees tapping public and private sources to provide health coverage to all Maine residents within five years while reducing care costs. But the details have yet to be worked out.
During the next year, state officials must design an affordable plan that private insurers will willingly bid on - no small undertaking.
"We've just taken the very first step in a very long path to universal health coverage," said Joe Ditre, executive director of Consumers for Affordable Health Care, an advocacy group.
"Traditionally, either you paid the full premium or you got nothing. Now the state is saying, if you can't pay the premium, we'll help you. This is a completely new direction for health care in the United States."
Health policy analysts and officials in states around the country say they will be considering the Maine programs as possible models.
"If they really make a big dent in the number of uninsured, that's a huge contribution compared to where the rest of the country is," said Robert Blendon, a professor at Harvard University's School of Public Health.
The bill's central plan - Dirigo Health, a name taken from the state's motto, Latin for "I lead" - underwent significant surgery amid opposition from hospitals, insurance companies and business groups. That it survived at all is seen as largely a function of the independent nature of politics in Maine, which has had two Independent Party governors in the past two decades.
"It has been so hard to reach a consensus," Blendon said of the debates in other states and in Washington. "The interest groups are so powerful. The public is ambivalent; they don't want to pay more taxes, and they're worried they're going to lose their insurance. We've had a really tough time getting moving on this thing. At the moment, Maine is the best game in the country."
The reforms are to assist poor and uninsured residents, among them people who are self-employed or work in small businesses and find the cost of coverage onerous.
Virginia Williams, 58, and her retired husband, Kent Wilkinson, 63, paid $13,836 this year in health insurance premiums for a plan with a $1,000 deductible. It was the only policy that Williams could get as the sole proprietor of her business, making organic catnip products such as heart-shaped toys and patterned sleeping mats in her two-story house in Freeport.
The couple's income was roughly $51,000 last year, so they are big supporters of the Dirigo plan. Based on the state's estimates, their premiums would fall to between $7,200 and $8,400 a year.
Without the change, "we just wouldn't be able to afford health insurance anymore," Williams said. "I still have a lot of years to go before I'm eligible for Medicare - if it's still there."
Forty miles north in Damariscotta, Steve and Traci Genthner, who can't afford health insurance, not even for their 11-year-old son Kyle, are among about 180,000 people statewide with no coverage.
Steve, who has seasonal income as a lobster fisherman, and Traci, who has a part-time retail job, don't qualify for Medicaid, the federally subsidized health insurance for the poor.
In May, when Traci Genthner, 33, learned she needed surgery to end a tubal pregnancy, she was so afraid of the financial strain that she pleaded with doctors for alternative treatments. In the end, she still needed the surgery, with hospital bills of $18,000.
About half will be paid through a hospital account funded by private donations, the hospital has told her, but the rest will likely become part of the state's "bad debt and charity care," which in turn drives premiums for people such as Virginia Williams through the roof.
The cost of treating this group comes to $270 million to $290 million a year in Maine, adding roughly 16 percent to the premiums of those who are insured. In the future, lawmakers believe, the savings will play an essential role in funding the Dirigo plan.
Traci Genthner's boss, Gail Montgomery, owner of the Well Tempered Kitchen in Waldoboro, said she welcomes the Dirigo Health plan as an opportunity to provide health care for part-time employees who "fall through the cracks."
Still, the Dirigo plan would require some employee contribution to the premium - state officials estimate less than $300 a month for an individual - unless the employee qualified for a state subsidy based on income.
When her husband isn't catching lobsters, Genthner said, "we live on my paycheck. If they were to take even a quarter of my paycheck during those months, I don't think I could afford to have coverage. Once his traps get pulled out of the water, we need all the money we can get."
The Dirigo Health program draws on public and private sources to offer comprehensive plans through private insurers. Major insurers such as Anthem Blue Cross Blue Shield and Aetna, both of which operate in Maine now, will be invited to bid for the state's health business.
In addition to employers and employees who can afford the premiums, the program will be bankrolled by federal funds and money saved from bad debt and charity care, state officials say. Insurers, doctors and hospitals have agreed to a voluntary 3 percent annual cap on revenue increases. The plan also restricts costly hospital expansions.
Employers who want to participate would have to contribute up to 60 percent of the premium and cover part-time workers who put in 20 or more hours a week and 75 percent of their work force.
"It's a leap of faith," said state Senate majority leader and bill sponsor Sharon Treat. "Those that voted against it said it was too big of a jump. Those that voted for it said, 'What do we have to lose?' This is the best thing we've seen in a decade."
The plan is particularly attractive to business owners such as Brian Ketchen, co-owner of Dave's Appliance in Winthrop, who provides full family coverage for all 14 of his employees at a cost of $6,000 a month.
Based on state estimates, he figures that his health insurance costs could drop 30 percent to 40 percent under the Dirigo plan, falling from 19 percent of his payroll to 10 percent to 11 percent.
"I'm looking forward to having something that's a real competitive product," he said, while acknowledging that because the program is voluntary, it's a tougher sell for businesses that don't provide health insurance for employees.
"It can fall flat on its face if nobody buys it," he said.
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Brian Condon, a lawyer in Winthrop, sees serious flaws in the plan. He says his law firm does not offer its eight employees health insurance because most are covered by their spouses' plans; the firm instead pays higher salaries.
Any time government imposes price controls, the cost gets passed on to somebody else, he said. The plan might encourage businesses like his firm to lower salaries to provide health insurance instead, but that would shift money from the private sector into the health care bureaucracy, he said.
"What does that do to the economy when you take that salary and put it into a section of the economy that is already an admitted sinkhole of administrative costs?" he asked.
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Opponents in the Legislature say that Maine created its health care woes through laws that tied the hands of the health care industry, forcing premiums up and driving insurers from the state. Dirigo Health, they say, is an extension of flawed thinking.
"There are a lot of people in our Legislature who want an opportunity to demonstrate that socialized medicine can work in the United States," said Republican state Sen. Kenneth Blais. "They want to use Maine to do that. That's what Dirigo is about."
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