Dirigo Health experiment well-intentioned failure

Let’s face it: Gov. John Baldacci’s Dirigo Health plan, a state-funded program that was supposed to provide subsidized health coverage to some 128,000 Maine people without insurance, is a costly failure. After four years and nearly $164 million committed to this program, less than 4 percent of Maine’s previously uninsured people have Dirigo coverage. An experiment that doesn’t even reach 4 percent of its goal after four years is clearly a failure.

When that failed experiment promised health coverage to the uninsured people in Maine, it’s much worse than a laboratory experiment or business venture that doesn’t work out. After four years and lackluster enrollment, there are still some 122,000 Maine people without health coverage. For the most part, these uninsured are working people who do not qualify for Medicaid, do not have health insurance through their jobs, or are self-employed and cannot afford the incredible cost of individual health insurance plans in Maine.

When it started in 2003, Dirigo Health promised to cover all the uninsured people in Maine with a self-funding program by the current (2008-09) budget cycle. Instead, only an estimated 4,500 previously uninsured people have health coverage through this state program. With a total enrollment of only 14,400, seven in 10 of these subsidized policies cover people who already had insurance.

Dirigo Health has consumed $53 million in federal budget relief funds plus another $110.8 million in savings offset payment and Dirigo tax money – $163.8 million so far. Maine families and businesses have had their health insurance costs increased by $110.8 million over the last three years for the Dirigo Health experiment. This is a counterproductive way of attempting to legislate more “affordable” health insurance for Maine people.

Unbelievably, legislative Democrats want to increase tobacco taxes, including another 50 cents per pack on cigarettes for a cost of more than $28 million a year, to continue throwing good money after bad at the failed Dirigo experiment. Additional taxes include a 1.8 percent tax on health insurance claims paid, which will make health insurance plans more expensive. The taxes on Maine people are too high already and spending another $28 million a year to cover less than 4 percent of Maine’s uninsured people is an indefensible waste of tax dollars and an irrational reason to raise taxes.

The insurance “reforms” in the latest Dirigo bill are costly, unproven and unlikely to have a significant impact on premiums for Maine’s small businesses, sole proprietors, and individuals buying insurance outside their employer. This proposal attempts to subsidize Maine’s poor insurance regulations with an uncertain reinsurance scheme while not fundamentally changing Maine’s guaranteed issue regulation. Only four other states – Massachusetts, New York, New Jersey and Vermont – have guaranteed issue laws like Maine’s, and that’s for a reason.

The latest Dirigo bill is a fundamentally flawed bill seeking to fix a fundamentally flawed program. Dirigo Health should be ended, not mended. Maine’s insurance laws should be reformed with proven patient-centered regulations shown to reduce costs, increase choices and expand competition.

We need to look no further than New Hampshire to see effective health insurance regulation. New Hampshire’s premiums are a fraction of Maine’s for those buying insurance outside their employer. New Hampshire’s small businesses have a dozen different insurance companies to choose from while Maine has four.

“Dirigo,” our state motto, means “I lead.” This clearly provided motivation, and a great name, to the governor’s desire to provide affordable health insurance to 128,000 people without coverage. Maine moved in a new direction to address this problem, but unfortunately, it was the wrong direction. It’s time to lead again, and stop funding an expensive experiment that is moving into its fifth year without ever coming close to meeting any of its goals. Dirigo’s time has passed. Dirigo should be Dirigone.

Tarren Bragdon is the CEO of The Maine Heritage Policy Center. His studies of Dirigo Health can be viewed at www.MainePolicy.org. He can be reached at tbragdon@MainePolicy.org.