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Executive Summary #1878 on Health Care

September 19, 2005

Executive Summary: Command and Control: Maine's Dirigo Health CareProgram

By

The Maine legislature has enacted a health policy agenda based on a massive increase in government central planning and control. Like Tennessee's ill-fated TennCare program, this ambitious regulatory agenda is also accompanied by a costly expansion of Medicaid, the federal and state program for the disabled and the indigent.

Dirigo Health is the Maine legislature's latest experiment in health care reform. Backed by Gov­ernor John Baldacci, Dirigo Health was introduced on May 13, 2003; debated for four short weeks at the end of the session; passed; and signed into law on June 18, 2003.

Each core element of Dirigo Health-Medicaid expansion, new state-designed insurance, and a new health care regulatory regime-is independent of the other two. The success or failure of one com­ponent does not jeopardize the success or continu­ation of another. As a political agenda, the program thus divides different constituencies, pitting them against one another and enabling the governor and his legislative allies to neutralize many groups with minor concessions while triumphing over the pro­gram's scattered opponents.

Maine's latest health care reform program is receiving widespread attention. In June 2004, the National Academy of State Health Policy (NASHP) issued a report providing an overview of the Dirigo Health reform initiative and explaining why NASHP believes that it will be effective in dealing with the cost-quality-access triangle. Advocates in the state legislature and elsewhere say that Dirigo Health offers important lessons for policymakers in other states and could eliminate the problem of unin­surance within five years, but Maine's latest project should serve as a warning of what not to do rather than as a model for other states to follow.

A Massive Program. Dirigo Health has three major elements: a massive Medicaid expansion; a state-designed, state-subsidized health insurance plan sold primarily to small employers and the self-employed; and a comprehensive and far-reaching set of new regulations and controls over the private health care and health insurance industries in Maine. The new program is characterized by gov­ernment central planning, government-standard­ized quality, and massive public spending.

A Better Policy. Maine's situation calls for a tar­geted approach that would encompass a combina­tion of ambitious insurance market reforms and serious regulatory changes to ease access and make coverage more affordable. These reforms would include:

  • Creating a statewide insurance exchange, sim­ilar to the Federal Employees Health Benefits Program, in which individuals and families in small businesses can personally choose afford­able private insurance;
  • Changing the law to allow Maine citizens to purchase more affordable plans from insurers licensed in other states;
  • Eliminating the state income tax obstacles to the purchase of affordable health savings account plans;
  • Overhauling Medicaid to provide direct subsi­dies or vouchers to enable Medicaid beneficia­ries to purchase private coverage if they wish to do so;
  • Opening up, not stifling, free-market competi­tion among providers in Maine by repealing Certificate of Need laws; and
  • Targeting government subsidies to low-income working families who need help in pur­chasing the private coverage of their choice.

Conclusion. Dirigo Health is based on the premise that government officials can best control and manage the entire health care system. Predict­ably, it is being trumpeted nationally by those who support more government control and more tax­payer funding of health care coverage. In reality, it is proving to be a costly and ineffective expansion of bureaucracy and government control that will drive up costs and further undermine consumer choice and competition in the health care system.

There is a better way. Real and effective health care reform should be based on the core principle that personal health care decisions are best left up to individuals and their doctors, not government offi­cials, state legislators, or well-intentioned bureau­crats. Real reform empowers the individual with the tools necessary to choose affordable, quality, and accessible health care services and health insurance coverage. It begins and ends with personal freedom.

Dirigo Health is not good for Maine and should not be copied elsewhere.

Tarren Bragdon is Director of Health Reform Ini­tiatives at The Maine Heritage Policy Center (www. MainePolicy.org). The author can be reached at  tbragdon@mainepolicy.org or (207) 321-2550.

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