Rehab for health care in Maine

If you play video slots in Bangor, you’re guaranteed, on average, a return of 89 cents on the dollar. For health care in Maine, the return isn’t as good: about 78 cents of every dollar gets paid out. The remainder of premiums goes to administration: executive salaries, underwriting, research on new and more devious ways to deny claims, marketing – and to building up cash reserves.

The insurance in-dustry in Maine apparently is devoted to building reserves. After being nearly reserve-less five years ago, Anthem Blue Cross and Blue Shield says it is currently sitting on a cash reserve of more than $200 million, collected from you. According to Mathematica Policy Research, Anthem has surplus reserves equal to 4.3 times Maine’s regulatory minimum. Cigna has surplus of 3.9 times the minimum, and Aetna, 1.6 times. For all its lament (and its lawsuit) over a $43.7 million savings payment for costs reduced last year by Dirigo Health, the insurance industry has already raised premiums by several times that for surplus reserves, which must impress shareholders.

It isn’t only health insurers that give this state one of the most expensive health care systems. A survey last year done for the Maine Association of Health Plans, for instance, found that compared with Massachusetts and New Hampshire, charges for surgical, medical, maternity and psychological/substance abuse stays were all highest in Maine. And an older, dispersed, less healthy population drives up costs too.

Dirigo Health, the Baldacci administration’s answer to these challenges, tries to cajole the system into saving money while raising the quality of care. It is the right idea, but the reform is also a collection of compromises stacked on a pile of concessions and it shows. Dirigo got Maine started on reform, but now Maine should do more. It should adopt the most efficient American system of medical coverage while ensuring that everyone is offered coverage and health care providers are fairly compensated. It needs Medicare for all.

Medicare, the federal program for seniors and the disabled, is having a tough time because its prescription drug coverage is driving people crazy with all the choices, limitations and gaps in coverage. But this merely highlights why the core of the program is so efficient. Part D, the drug coverage, is what happens when you bring the private market into a system the government ran well, with 98 cents on the dollar going to services.

I’ll spare you the paragraph about how the United States is the only advanced country in the galaxy without a national health insurance system and how the uninsured are sicker and die sooner than those insured. You know that already, just as you know the private system we do have costs twice as much for less care than those other systems, adding a terrible burden on everyone, particularly our places of employment. Maine can’t solve the national debate, but it can notice that it spends a lot of health care dollars on costs that don’t result in care. It can also focus on eliminating those costs through improved monitoring for quality.

The federal Medicare program has shortcomings – primarily, it is badly under-funded given expected demand. But with the $8 billion spent on health care annually in Maine, adequate funding here is not the issue. Our shortage is in imagining a better way to use that health care money. But a system that took everyone (goodbye underwriting), set rates that are paid consistently and reflect providers’ costs (unlike Medi-caid), established a global budget that required conscience choices we make now by default, offered a single set of forms to lower those administration costs further and put an emphasis on preventative care would save this state’s residents enormously.

This may not be precisely the right combination of reforms, but this is the direction. The overwhelming point is that the current health care costs are unaffordable, small changes are not enough and Medicare delivers coverage efficiently.

The state could establish a nonprofit to compete against the private, for-profit insurers but that should be the second choice. The privates have too much money and would under-price their products, as they did in the 1990s, to keep any state system from gaining market share. With that money they have in reserve, they could fight for several years.

That would be good while it lasted – rates would be artificially low and the crisis would seem to disappear – until the threat from the state went away. Then, just as in the ’90s, the costs of the fight would be recouped. From you. That would be unpleasant, and Maine would not have really advanced its health reform. It may be better to let the private insurers, if they choose, try to compete on price and quality of service instead of the traditional risk selection and avoidance. With prices set, access guaranteed and coverage basics spelled out it detail, that’s all that would be left anyway and it’s not a bad incentive from a consumer’s perspective.

The Institute of Medicine at the National Academies concludes that about 18,000 deaths a year are attributable to a lack of health insurance and that even a single family member without insurance can impoverish a family. Medicare began 40 years ago as part of the Great Society programs that lifted so many of the elderly and disabled out of poverty. What has worked for them could work for everyone else in Maine too.

Who wouldn’t want to be lifted out of health care poverty?

Todd Benoit is the editorial page editor of the Bangor Daily News.