Dirigo Health: Maine’s Health Reform Experiment Tarren Bragdon Director of Health Reform Initiatives Maine Heritage Policy Center

Dirigo Health’s Three Parts Medicaid expansion DirigoChoice – subsidized insurance product for individuals and small businesses New State healthcare and health insurance regulations and controls

Dirigo Health’s Three Promises Eliminate all 135,000 uninsured within 5 years Be self-supporting with no new taxes or state funds (beyond first year) Stabilize health insurance premiums and healthcare cost increases

Dirigo Health DirigoChoice Insurance Product Available to small businesses (<50), individuals and sole proprietors beginning in January 1, 2005 Minimum 60% employer contribution for employee-only premium (0% for dependent coverage) Two products - $1,250/$2,500 deductible & $1,750/$3,500 deductible (individual/family) Premium subsidies for employees earning less than 300% of poverty ($29,400 for individual or $60,000 for a family of four) Reduced deductibles and out of pocket maximums also based on income

DirigoChoice - The 6 Plans for Employee-Only Coverage – 2005 rates

DirigoChoice - The 6 Plans for Family Coverage – 2005 rates

DirigoChoice Sales to Date– 74% Below Projections

Uninsured Not Buying DirigoChoice Only 22.4% of those enrolled in DirigoChoice were uninsured at time of enrollment. There was no control group for other insurance plans. Chart based on 10/1/05 enrollment Source: Dirigo Health Agency, Muskie Survey

DirigoChoice Not Reducing Uninsured – Results of First Year

Dirigo Health Funding Assess Dirigo Health’s “savings” to Maine’s healthcare system Recover those savings through a Savings Offset Payment (SOP) assessed on health premiums and third party administrators – up to 4% of premiums

The Savings Offset Payment Savings Initiatives Bureau of Insurance Deemed Reasonably Supported Hospital Savings Initiatives – Voluntary cap $33.7 million Uninsured Savings Initiatives – Uncompensated care $2.7 million Health Care Provider Fee Savings Initiatives – Medicaid rate increases $7.3 million Total$43.7 million

Certificate of Need State Health Plan Capital Investment Fund Insurance Carrier Savings Initiatives – voluntary caps on underwriting gains Maine Quality Forum Dirigo Initiatives the Bureau of Insurance Deemed of No Impact

DirigoChoice by the Numbers Cost per enrollee per year $4,191 Paid by individual and employer $2,325 (55.5%) Taxpayer cost per enrollee $1,866 (44.5%) Taxpayer cost per uninsured $8,330 (only 22.4% of enrollees) Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

DirigoChoice by the Numbers At current rate, to reach all 135,000 uninsured in Maine  Take 81 years (at current rate of 1,666 uninsured per year)  Cost $1.1 Billion (about total annual Maine income tax collections) Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

Dirigo Health – Lessons Learned Help individuals directly – not certain insurance plans purchased by individuals working at particular businesses The uninsured don’t all work at one small business (therefore you can’t reach them by convincing that business to provide a certain health benefit) Getting a business to move from not offering insurance to providing any benefit is a costly change – don’t have unrealistic employer contribution requirements Don’t make it complex to administer and understand Premiums matter - 85% of DirigoChoice enrollees choose the higher deductible plan deciding that even with the subsidies the lower premium-higher deductible was a better value Don’t fund a program to reach the uninsured by punishing those with private health insurance with higher premiums