NCPA - National Center for Policy Analysis


August 24, 2009

Want a preview of ObamaCare in action?  Then take a look at what has happened in Maine.  In 2003, the state to great fanfare enacted its own version of universal health care.  Democratic Governor John Baldacci signed the plan into law with a bevy of familiar promises.  By 2009, it would cover all of Maine's approximately 128,000 uninsured citizens.  System-wide controls on hospital and physician costs would hold down insurance premiums.  There would be no tax increases.  The program was going to provide insurance for everyone and save businesses and patients money at the same time.

After five years, fiscal realities have hit the insurance plan.  The system that was supposed to save money has cost taxpayers $155 million and is still rising, says the Wall Street Journal.

Here's how the program was supposed to work, says the Journal.  Two government programs would cover the uninsured:

  • First the legislature greatly expanded MaineCare, the state's Medicaid program; today Maine families with incomes of up to $44,000 a year are eligible; 22 percent of the population is now in Medicaid, roughly twice the national average.
  • Then the state created a "public option" known as DirigoChoice; this plan would compete with private plans such as Blue Cross.
  • To entice lower income Mainers to enroll, it offered taxpayer-subsidized premiums.
  • The plan's original funding source was $50 million of federal stimulus money the state got in 2003.
  • Over time, the plan was to be paid for by savings in the health care system; this is precisely the promise of ObamaCare, however, Maine saved by squeezing payments to hospitals and physicians.

The program flew off track fast, says the Journal:

  • At its peak in 2006, only about 15,000 people had enrolled in the DirigoChoice program.
  • That number has dropped to below 10,000, according to the state's own reporting.
  • About two-thirds of those who enrolled already had insurance, which they dropped in favor of the public option and its subsidies.
  • Instead of 128,000 uninsured in the program today, the actual number is just 3,400.
  • Despite the giant expansions in Maine's Medicaid program and the new, subsidized public choice option, the number of uninsured in the state today is only slightly lower that in 2004 when the program began.

Why did this happen?  Among the biggest reasons is a severe adverse selection problem: The sickest, most expensive patients crowded into DirigoChoice, unbalancing its insurance pool and raising costs.  That made it unattractive for healthier and lower-risk enrollees.  And as a result, few low-income Mainers have been able to afford the premiums, even at subsidized rates, says the Journal.

Source: Editorial, "No Maine Miracle Cure; Another state 'public option' that failed," Wall Street Journal, August 21, 2009.

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