Most legislators would agree that Dirigo is not sustainable in its current form. While the program has covered about 4000 previously uninsured Mainers, covers some 6000 Medicaid recipients, and provides a less expensive alternative to many previously insured people, it has not met all of its goals. A bigger problem with Dirigo is figuring out a long term strategy to provide for its funding as can be seen in the current debate over referendum Question 1.
During my first debate with Jon McKane, when asked what he would do to fix our healthcare crisis in Maine and expand coverage, McKane responded that he would rely on “high-risk pools” to decrease the cost of health insurance in the state.
This is the same plan forwarded by Presidential Candidate John McCain. McKane has often advocated this policy, but for several reasons, it is a seriously flawed policy.
The simple fact is that high-risk pools have done very little to help insure people. Though they have been around for 30 years, they cover less than 210,000 people in a country with roughly 50 million uninsured people. That is .0042 percent of the total that need to be insured. A case in point is Florida where their high-risk pool covers a whopping 300 people. Yes, you read that right, 300 people.
The reasons for this failure are simple.
1) High-risk pools are expensive. The premiums for these plans are very high; often double the price for the standard cost of a health insurance plan. The cost to states is also high. For that tiny .0042 percent of the population, the cost of administering high-risk pools by states is roughly $2 billion per year. That is an average cost of over $9000 per person that is paid by the state where the high-risk pool recipient lives. Dirigo Health, a frequent target of McKane, costs Maine less than $3000 per person.
2) High-risk pool premiums are much higher for the very people that they are designed to cover. States set a ceiling for the high-risk pool rate between 125 and 200 percent of the standard rate for insurance.
In Maine, a 200 percent cap would mean that high-risk insurance would cost about $16,000 per year for a single person. Even with these very high premiums, there is usually not enough money to pay the claims, meaning further government intervention or cost shifting onto the rest of the insured population. Furthermore, because the plans are so expensive, the people in need of the high-risk pool cannot afford the insurance.
3) Where high-risk pools are used, they are used as the last alternative available to the sickest and most vulnerable of society. They are exactly what they sound like, a special pool for everyone with high-risk factors for diseases. Insurance companies call these people “medically uninsurable.” These are often the people least able to afford the drastic increase in their health insurance cost.
4) When high-risk pools are put in place, and high-risk individuals are unable to afford health insurance, they drop out of the program and resort to emergency room care. This is already a major problem in Maine and will result in higher costs for everyone else. Often, emergency rooms bills total thousands of dollars very quickly and without insurance people often cannot afford to pay the bill. This year alone, hospitals have been left with $30 billion in unpaid bills. The hospitals don’t just absorb the losses. If they did, they would go bankrupt. Instead, they have to raise fees on everyone else. When uninsured people have no choice but the emergency room, it drives your health care costs up.
5) Pre-existing conditions clauses also frequently mean that people cannot get coverage for their ailments, the very ailments for which they are at high-risk. That means, again, they will not buy into the high-risk pools. In fact, a recent survey by the American Cancer Society recently found that only 2 percent of callers to its insurance hotline enrolled in high-risk pools after they were notified of the pools.
The reality is that people who don’t have health insurance still have a healthcare plan. It is called the emergency room and it is where people without insurance must turn in the event of grave illness. But by waiting on care, and relying on the ER, they are increasing the overall cost of healthcare delivery. This is a major reason for our high healthcare costs in Maine and the resulting high cost of health insurance.
We must find a way to cover the uninsured in Maine. Dirigo was an attempt at that. Dirigo ensures 18,000 people, 6000 of which are covered as part of Maine’s Medicaid program. But of those 18,000 only 4000 were previously uninsured. That is a small percentage of the 130,000 that are uninsured. But, it is a start.
After initiating Dirigo, Maine went from being the state with the highest percentage of uninsured citizens to the state with the lowest percentage of uninsured citizens. Now, Vermont and Massachusetts have surpassed Maine with a healthcare responsibility mandate.
The truth is that Dirigo or its replacement needs to be included in comprehensive healthcare reform; and that includes figuring out a good way to pay for it.
So, Dirigo covers too few people and does not have a stable funding source. High-risk pools exclude the most vulnerable and would cover very few people based on national averages. So, what is the answer? Well, it is a difficult question.
I believe that if we want to fix healthcare insurance in Maine it is necessary to get everyone enrolled in an insurance plan. Complete coverage will allow people to access primary care and treat problems long before they are emergency room visits. It will also mean that everyone is paying toward the inevitable cost of their own healthcare. Much like the rates for compulsory automobile liability insurance coverage, spreading the risk should also cause rates to drop.
Massachusetts and Vermont now require that everyone buy into a health insurance plan. In a short time, Massachusetts has achieved 95 percent coverage.
A key benefit of the Massachusetts plan is that by getting nearly everyone covered by some form of private insurance, the insurance companies should be able to cut premiums by 24 percent according to a large actuarial study of the policy. The program is only in its second year, so the data is still out on a reduction in premiums. But, so far, the program is meeting its goals of expanding coverage broadly.
The Massachusetts plan is also well thought out in another way. Certainly, the reason that many of Maine’s 130,000 uninsured citizens don’t have health insurance is the cost. To combat this problem, Massachusetts offers a premium subsidy based on income. Those who do not qualify for Medicaid, are provided a subsidy that declines with increases in income. The subsidy covers everyone making up to 300 percent of the Federal Poverty Level. That is about $58,000 for a family of four. This is the same type of subsidy that was devised for Dirigo and the part of the plan that both sides seem to think is a success.
The key to the Massachusetts plan is that it recognizes that having health insurance is a collective right and responsibility. In order for everyone to be able to afford coverage, both the healthy and sick need to be enrolled and have coverage. As many people discover, you can go from being healthy to sick in a very short time indeed. If everyone has health insurance, they will treat illness sooner, seek care when it can be less expensively obtained, and not risk waiting until their situation is so dire that they have to go to the emergency room to survive.
Furthermore, because everyone is insured, the risk is spread across the population and insurance rates can come down because now the ‘healthy’ are included in the pool and there are fewer people relying on the emergency room for primary care. The healthy benefit by being covered if unforeseen illness strikes and by having better access to preventative care, thus keeping them healthy farther into their lives.
The key benefit of having everyone covered by health insurance is that the entire health care system saves money. As people move away from critical care (emergency rooms, the most expensive type of care) and into primary and preventative care (doctor’s offices and regular check-ups) healthcare costs decrease.
The jury is still out on one aspect of the Massachusetts plan. The biggest issue will still be the rising cost of healthcare; the root of our national healthcare crisis. In Maine, Dirigo has helped control those rising costs. We must, as a society, figure out how to control the rise in costs better. But a major step in the right direction for everyone is getting everyone covered by a health insurance plan.
Let’s find a real solution to Maine’s healthcare crisis; not a failed plan that covers .0042 percent of those who need coverage.
