NCPA - National Center for Policy Analysis


May 25, 2007

Maine, the first U.S. state to establish universal health insurance as a policy objective, is experiencing growing pains with its voluntary program.  Its experience may provide lessons to states implementing their own universal schemes or otherwise seeking to reduce the numbers of uninsured, says Oxford Analytica.

In 2003, Maine passed the Dirigo Health Reform Act, with the ambitious goal of establishing universal health insurance coverage by 2009.  However, the Dirigo plan's few years have not seen the sort of success that policymakers had originally hoped for and predicted.  For example:

  • The number of uninsured Mainers under 65 years old actually rose from 130,000 in 2004 to 141,000 in 2005, according to the U.S. Census Bureau.
  • DirigoChoice sales are also 75 percent below projections, according to the Maine Heritage Policy Center.

If the goal is to expand coverage to the uninsured, there are a number of key points that Dirigo failed to adequately address:

  • Complex benefit design deters people from taking up benefits and raises the cost of switching from their current provider.
  • Getting small businesses to start offering insurance for the first time is a difficult and untried task.
  • DirigoChoice has also suffered from an influx of unhealthy people who see the subsidized plans as affordable, given their health problems.
  • Meanwhile, healthy people still find the insurance too expensive and do not join the risk pool.
  • The ultimate result is that insurance premiums have remained higher than anticipated by the plan's designers.

Maine's experience suggests that state "universal insurance" schemes will face significant challenges, particularly adverse selection problems that create unattractive risk pools for insurers and cost issues.  The Massachusetts model, which compels individuals to secure insurance, may be a superior blueprint for reform, says Oxford Analytica.

Source: "Maine Offers Lessons On Health Reform," Oxford Analytica, May 25, 2007.


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