Lessons from Maine

The Connecticut General Assembly  is considering SB194, which would change the process by which insurance companies obtain rate increases in the individual insurance market.  I offered some perspective before the Insurance and Real Estate committee, drawing on our experience in Maine.

Guaranteed Issue, Community Rating Lead to High Premiums

Reason Magazine takes a look at the dismal track record of state “reform” efforts to date. It cites New York as “exhibit A” for its guaranteed issue and community rating provisions. It says, “In 1994 just under 752,000 individuals were enrolled in individual insurance plans, about 4.7%  of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today that figure has dropped to just 0.2%. By contrast, between 1994 and 2007 the total number of people insured in the individual market across the U.S. rose from 4.5% to 5.5%.”

It adds Washington state as another example.”In 1996 similar reforms in Washington state preceded massive premium spikes in the individual market. Some premiums increased as much as 78% in the first three years of the reforms-10 times the rate of medical inflation.” And it cites a Health Affairs study as saying, “in addition to Washington and New York, the individual insurance markets in Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, and Vermont “deteriorated” after the enactment of guaranteed issue.”

It also notes about Massachusetts that, “Health insurance premiums in the Bay State have risen significantly faster than the national average, according to the Commonwealth Fund, a nonprofit health foundation. At an average of $13,788, the state’s family plans are now the nation’s most expensive.”

Maine’s Dirigo Plan Can’t Repay Loan

Remember when health reform was going to save us money through making sure everyone had insurance, so as to avoid expensive trips to the ER and so forth?

The state of Maine had great ambitions when it launched the Dirigo program. But now, Dirigo is failing to live up to expectations:

Earlier this year, lawmakers extended Dirigo Health a $25 million loan to help cover costs while the program worked toward self-sufficiency. Karynlee Harrington, executive director at Dirigo Health, told the committee Thursday that the program does not expect to be able to pay back the full $25 million by June 30, as required.“We are making progress. We have a positive cash balance,” Harrington said. While the program expects to be self-sufficient sometime in fiscal year 2011, which begins July 1, it will not likely happen before then, she said.

One legislator described the program as being on “life support.”

A Tax Penalty of $2,250 per Family

The Senate will likely vote soon on a Motion to Proceed with debate on Senator Harry Reid and the Senate Democrats’ Health Reform Bill. Make no mistake, this Motion to Proceed is the first critical vote in this debate and will require 60 votes to move ahead with this costly, government takeover of U.S. health care.

Consider these costly facts about the Reid Bill:

• 2,074 pages (more than the Pelosi Bill that barely passed the U.S. House thanks to Congressman Michaud’s last minute support).
• Costs $2.5 trillion over 10 years of full implementation (2014-2023).
• Has $494 billion in tax increases, including a tax penalty of $2,250 for each family that does not buy government-approved health insurance. See all tax increases.
• Includes a government-run plan, that, according to the Congressional Budget Office, would “typically have premiums that were somewhat higher than the average premiums for the private plans in the exchanges,” much like Maine’s experience with Dirigo as the NYTimes and Sean Hannity have recently noted, highlighting research by The Maine Heritage Policy Center.
• Mandates that states spend an additional $25 billion in Medicaid expenditures, including a mandated 13% expansion of Maine’s already huge Medicaid program.

After many conversations with Senator Snowe and Senator Collins, and their staffs, we have every reason to believe that both Senator Snowe and Senator Collins will vote NO on the Motion to Proceed with debate on this House-approved, big-government health care overhaul.

Learning from Maine

The U.S. House passed 2,000+ page bill late Saturday night that includes many ultra-liberal features that will doom the plan in the U.S. Senate.  It would create more than 100 new federal agencies with untold control over the lives and decisions of American citizens.  The fast-and-loose budget tricks which make the bill appear fiscally viable crumble at the slightest examination.  For a good review of this, read a column by Michael Tanner of the CATO Institute here: The Cost of Health Care Reform

Maine has a great deal to teach the other forty-nine states about a so-called “Public Option” because the state started one here in 2004 called Dirigo. This experiment has been a total failure, as shown in this recent report on the Sean Hannity program. If you haven’t seen this excellent video, please click here:  The Maine Lesson.

Collective Neurosis in Maine: Big Government Bad, We Need Gargantuan Government

Gardiner Harris of the New York Times has a balanced feature on Maine’s experience with so-called “universal” health care.  It even cites the Maine Heritage Policy Center’s Tarren R. Bragdon, whose research should have long convinced anybody that government attempts to impose “universal” health coverage are a sure-fire recipe for spiralling costs and reduced coverage.

Unfortunately, Mr. Gardiner gives more than equal time for those who blame Maine’s failures not on government control, but a sick and poor population.  Talk about blaming the victim!  These folks also blame the fact that Maine has a single, dominant, health insurer – without recognizing the government policies that created this dominance, and ignoring Mr. Bragdon’s proposal that the New England states form a compact to allow their residents greater choices.

Unfortunately, these folks don’t recognize their own neurosis (which means doing the same thing again and again, despite the fact that it no longer works).  Big Government in Maine can’t solve the health crisis.  Gargantuan Government from Washington, DC can’t solve it either.

Mainers Expand Medical Marijuana Law

In yesterday’s election, Maine voters approved a measure on medical marijuana:

Question 5 would expand Maine’s medical marijuana law to permit marijuana to be used for treatment of many more conditions, and to create a system in which patients can get the drug from nonprofit dispensaries.

All well and good for the advancement of the idea of personal choice in health care, but why limit dispensaries to non-profit organizations? After all, profit-seeking companies such as Walgreens, CVS and RiteAid are important and uncontroversial parts of our health care industry.

Lesssons From Maine–Broadcast Nationwide

Last night the Sean Hannity Show included a detailed report on Maine’s attempt to create a “public option” plan.

I was among those interviewed in this extensive segment, which includes viewpoints from supporters of Dirigo as well.

The Bottom Line on Dirigo is quite clear: When Dirigo was passed in 2003, it was supposed to cover all 128,000 uninsured by this year - not raise taxes, lower health care costs and decrease health insurance premiums.

In reality:

• For DirigoChoice – the government plan – premiums are up 74 percent in four years.
• Maine has 21,000 more uninsured today than before Dirigo went into effect in 2004. Maine now has the second-highest uninsured rate in New England.
• Dirigo covers fewer than 3 percent of Maine’s uninsured today, despite spending $155 million of your taxes so far.
• The Legislature recently passed a new tax on health insurance claims to continue funding this failure – a tax that will cost the typical Maine family another $300 per year!

Stop Guaranteeing Insurance Company Profits

Is a 3% profit too much to ask? Apparently.

The Kennebec (Maine) Journal reports on a dispute between the State of Maine and Anthem Blue Cross Blue  Shield. Anthem asked the state’s permission to raise its prices (premiums). The state said no, and now Anthem is suing the state.

The company had asked for a guaranteed profit of 3%. Yet that was just too much for 100 people who attended a protest against the company.

The article does include, as articles about insurance companies are prone to do, a story about a family that had trouble getting the coverage they thought they ought to get. That’s fine; if a company reneges on a contract it should be pummeled with bad publicity and, if appropriate, legal action.

But capping profits? There’s a better way to do that. Let free competition decide how much profit an insurance company will make, not a government regulatory agency. After all, food is as vital to human life as health care, yet we don’t expect Safeway or Publix or Kroger to ask “Mother, may I?” from a government official before it raises the price of a head of lettuce or lowers the price of ice cream. No, grocery stores compete on selection, service, atmosphere and of course price–and their profit margins are, if I recall correctly, something around 2%.

With insurance, however, Maine (like every state) has a regulatory apparatus that defines what kind of insurance can be offered in the state, who can sell it, and what prices they can charge to whom.

If you think a 3% return of capital to an insurance company is too much, let other companies come into the state and wrestle for market share. Maine, for example, could implement a New England insurance compact (PDF) along the lines suggested by the Maine Heritage Policy Center.

Skating on Potomac River Ice in the Middle of a “Snowe” Storm

It never ceases to amaze me how the busiest woman in Washington remains so accessible.  Just this week alone, I am aware of 8-10 hours of direct Washington senior staff time devoted to Maine doctors, patients and health care professionals in reviewing the impact of the Baucus bill on Maine families and businesses. 

Impressive. 

Unfortunately, it would appear that there are a number of folks in Washington who are unwilling to make the same time commitment, as they rework one-sixth of our economy.

Sen. Olympia Snowe (R-Maine) laid out her understanding of the need for "full consideration" during the health care debate in a statement she released on her website on September 22:

Given the gravity of this landmark endeavor… there should be no question this undertaking commands a painstaking process and the requisite time for full consideration of the spectrum of alternatives and improvements…and to ensure the numbers "add up" within the final product – as we are the only committee of jurisdiction with respect to financing a package.  The implications of this legislation are simply too broad and monumental to do otherwise.

Senator Snowe's statement is pretty straight forward. She believes that members of the Senate Finance Committee should be able to read the bill and know how much it costs — a sentiment she shares with her constituents back home.

On the following day, September 23, Senate democrats voted down an amendment proposed by Republican Senators Bunning and Cornyn, which would have required that the actual legislative language and a final Congressional Budget Office price tag be posted for 72 hours on the Committee website for public review. This would occur before the Senate Finance Committee could vote on final passage.

One way to easily get a sense of how irritated Senator Snowe is on a particular issue, is to time the release of one of her "statements" to the actual event to which it is referring.  Think of it like a thunderstorm – where you time how far apart the lightning and thunder are to judge just how close the storm is. I would say the storm is directly over head at this point as Snowe's statement flashed on her website shortly after the vote. She did not mince words saying,

"The fact is words matter and so do the numbers.  This amendment represents a common sense, practical, pragmatic, good government approach to understanding the totality and the collective impact of what we do. We want to be sure that we are absolutely confident in the integrity of the product that we are going to be voting on in the final analysis."

Let me translate that statement for the Democrats on the Senate Finance Committee. You are skating on Potomac River ice in the middle of a Snowe storm.  It's not going to end well.  When she uses words like "common sense"  "practical" and "pragmatic" in the same sentence – you might want to consult with your Senate colleagues on the Right.  They learned to speak Moderate in the previous Administration.   The grimace on their faces -followed by a Cheshire cat smile- should be translation enough.

The way I see it — Senator Snowe and her staff have work tirelessly to save the health care bill from complete implosion by offering a series of amendments designed to breathe new life into the reform effort –and perhaps provide the Gang of Six a little more time to work out some type of bipartisan bill.  She continues to be accessible to folks back here in Maine, and her staff is speaking daily to doctors, state legislators, other health care professional as well as patients — in an attempt to find solutions that will work for Maine people.

I can assure you right now – that reading the bill and knowing how much it costs are the first two items on Senator Snowe's health care reform agenda and the same goes for her constituents back here in Maine.  The failure of Democrats on the Finance Committee to recognize that fact may very well signal the end of any hope for bipartisanship in health care reform.