Single-payer savings come under attack Consultant says insurance more costly than status quo

Insuring every Mainer under a government-run health insurance plan would cost more than sticking with the status quo, a preliminary consultant’s report has concluded.

Mathematica Policy Research Inc. of Washington, D.C. found that a single-payer system would cost on the order of 14 percent more than projected spending on the existing system in 2004.

By 2008, the difference would be just 7 percent, reflecting savings from a single administrator for all health bills and lower medical costs for those now uninsured who would have gained access to preventative care under the proposal.

Even though the plan would cover more than 150,000 people who now have little or no health insurance, some single-payer proponents had hoped to see an overall saving through elimination of insurance company profits and administrative duplication. But none of the three major benefit plans analyzed showed a saving over status quo expenditures expected in 2004 and 2008.

“That’s not necessarily going to help us sell this to the Legislature,” said Rep. Paul Volenik, D-Brooklin, a co-chairman of the state commission that sponsored the study. Volenik is a long-time proponent who sponsored a single-payer bill that got transformed into the study in the last legislative session.

The numbers were generated through a computer model that takes into account a variety of local, state and federal data. It is designed to allow lawmakers to change the variables to see how the total system would be affected.

Some lawmakers who once spurned single-payer have said they want to take a new look at the concept given rising health-care costs and insurance premiums.

Maine’s expenditures on health care are projected to be $8 billion in 2004, 37 percent above 2001 estimated expenditures, the consultant reported.

Even though Mathematica’s preliminary single-payer projections show the system would be more expensive than thought, Volenik said he’s still pleased. He noted that the richest plan proposed, a Medicaid-type system in which there would be no co-payments for treatment, would cost $11.1 billion in 2008, about $500 million more than what’s now projected to be spent then.

“For Cadillac coverage that’s not a lot of money,” he said.

Robert Downs, a commissioner who represents the Maine HMO Council, said he wasn’t making any decisions based on the preliminary study.

“One’s reactions to the numbers can be somewhat dependent on one’s persuasion going into the process,” Downs said.

There’s a lot more work to be done, he said, and further analysis of the economic consequences of the plan is necessary.

“It certainly won’t cost us less than it’s costing us today,” he said.

The insurance industry has the most to lose. If Maine became the first state in the nation to adopt such a system, it would put health insurance companies out of business here.

Anthem Blue Cross Blue Shield, the largest private insurer of Mainers, believes a single-payer system would just change who’s paying the bill for health care without working to address the factors driving the increase in health insurance costs, said William Cohen, a spokesman.

Additionally, he noted that the HMO Council is hiring an outside consulting firm to look at Mathematica’s methodology.

“One of the things we don’t totally understand is what Mathematica has in the black box,” Cohen said.

And even if you accept Mathematica’s model as correct, it doesn’t hit the overall savings target of 5 percent envisioned by lawmakers, he said.

“It missed by a great deal and it would have a huge impact,” Cohen said. He added that the plans would require higher taxes.

Volenik said he expects Mathematica will be able to find some additional savings between now and its final presentation on Dec. 18. He also noted that the company said it chose to take a conservative approach in looking at possible savings, because it would rather be proved wrong in calculating too little savings than too much.

The commission plans to draft its recommendations and any proposed legislation before presenting its work to the Legislature on Jan. 15.

Gov.-elect John Baldacci said during his campaign that while he appreciates the goals of a single-payer system, he favors an alternative plan to cover all Mainers that builds on the existing private/public insurance system.

Between the commission and any Baldacci proposal, Volenik predicts a “huge year” in Augusta for health care. He said he plans to advocate for a single-payer system, although he will be term-limited out of the Legislature with the new session.