Baldacci proposes health insurance mandates

AUGUSTA – Gov. John Baldacci and his health care team on Wednesday rolled out a far-reaching set of proposals aimed at improving access to health care coverage in Maine.

The package includes a requirement for all Mainers to have health insurance and all businesses to provide it in some form. It also eases regulations governing insurance companies, revamps the state’s Medicaid program and reformulates funding for the DirigoChoice insurance plan.

Baldacci characterized the initiative as building on the success of his Dirigo Health reforms to move the state toward universal coverage, but critics were quick to criticize the proposals.

Included in the package is a provision that all Maine residents with an annual income of more than 400 percent of the federal poverty level – that’s about $39,000 for an individual – should be required to purchase health insurance.

Baldacci also proposes that all employers should have to “pay or play” – either offer their workers health care coverage or else pay into a state fund to subsidize health care costs. The requirement for employers would take effect in July 2008, while individuals would have until January 2009 to sign up for coverage.

With about 54,000 working Mainers currently covered by the publicly funded Medicaid program – called MaineCare – the governor said, employers need to offer affordable private insurance. And those Mainers who can afford coverage should be buying it, he said.

Before those provisions take effect, however, Baldacci’s proposal would enact a number of other reforms aimed at relieving the overburdened MaineCare program, stimulating competition in the private insurance market and paving the way for modest growth in the subsidized DirigoChoice insurance plan.

Changes proposed in MaineCare include requiring every enrollee to have a primary care provider in order to reduce expensive routine care delivered through hospital emergency departments. The prescription co-pay for some enrollees would increase, and the program would seek to recover costs that should be paid by other sources, including workers’ compensation and the federal Department of Veterans Affairs. Changes to eligibility guidelines are not part of the proposal.

The contentious savings offset payment levied against insurers and used to fund subsidies in the DirigoChoice insurance program would be reformulated to reflect only the reduction in the amount of “free” care delivered by hospitals as a result of more Mainers having coverage.

The subsidies would also be funded by a new 2 percent tax on HMO insurance plans as well as by penalties levied against individuals and employers who fail to comply with the coverage requirement. A “modest” increase in DirigoChoice enrollment is expected, the governor said – about 1,000 new sign-ups in the coming year, bringing enrollment to about 14,500 people.

The governor made significant concessions to insurance companies and legislative Republicans, who have long maintained that overregulation has killed competition and forced spiraling increases in the cost of insurance coverage.

A proposed “reinsurance” plan would move high-cost health care consumers into a separate risk pool, potentially lowering costs for other consumers. Allowing companies more latitude in charging higher monthly premiums for some groups would also hold down costs for healthier groups. If enacted, the proposal would include a “sunset provision” to undo these changes if they are found not to have improved the insurance climate in two years.

Around the State House, response to the governor’s announcement was lukewarm.

House Minority Leader Josh Tardy, R-Newport, called easing insurance regulation “a step in the right direction” and also welcomed the proposed changes in MaineCare. Increasing co-pays and decreasing emergency room care “can book real savings while still maintaining the safety net,” he said.

But Tardy said requiring all employers to offer insurance will put some companies out of business, and he criticized the idea of funding DirigoChoice with a tax on HMOs as “an attempt to bail out a program that’s not sustainable.”

Senate President Beth Edmunds, D-Freeport, issued a brief statement applauding Baldacci’s “bold moves to expand access to health care for Maine people” and said she looked forward to working on the proposal with him and other legislators. An attempt to reach Edmunds for further comment was not successful.

Joe Ditre, executive director of Consumers for Affordable Health Care and a champion of the DirigoChoice plan, was less circumspect.

“This isn’t really a plan so much as it is a grab bag of proposals that are in some ways moving us away from universal coverage,” he said. Ditre predicted that easing insurance regulations would make things worse for Maine consumers, not better.

The liberal Maine People’s Alliance, also a staunch supporter of universal access to health care, questioned the governor’s proposals and accused him of putting the DirigoChoice program “on life support.”

The conservative Maine Heritage Policy Center said it was troubled by what it believes are tens of millions of dollars in new taxes woven into the governor’s proposal.

Trish Riley, director of the Governor’s Office of Health Policy and Finance, acknowledged that the package of proposals will be a hard sell. But she said the highly politicized debate over health care has made it impossible to make change without concessions.

“We’ve been in a polarized, ideological war,” she said. “It’s time to incorporate all these ideas in order to make unsubsidized coverage more affordable and keep the Dirigo program strong.”

The governor’s proposals will be crafted into a single piece of legislation and presented to lawmakers for debate in the coming weeks.

The Associated Press contributed to this story.