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Obamacare: The Maine Experiment

August 21, 2009 | No Comments Abortion, Health Care, The Constitution

Want a preview of ObamaCare in action? Sneak 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 as brutal as the waves that crash along Maine’s famous coastline have hit the insurance plan. The system that was supposed to save money has cost taxpayers $155 million and is still rising.

Here’s how the program was supposed to work. 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% of the population is now in Medicaid, roughly twice the national average.

Then the state created a “public option” known as DirigoChoice. (Dirigo is the state motto, meaning “I Lead.”) 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. Maine saved by squeezing payments to hospitals and physicians.

The program flew off track fast. 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.

This problem was exacerbated because since the early 1990s Maine has required insurers to adhere to community rating and guaranteed issue, which requires that insurers cover anyone who applies, regardless of their health condition and at a uniform premium. These rules—which are in the Obama plan—have relentlessly driven up insurance costs in Maine, especially for healthy people.

The Maine Heritage Policy Center, which has tracked the plan closely, points out that largely because of these insurance rules, a healthy male in Maine who is 30 and single pays a monthly premium of $762 in the individual market; next door in New Hampshire he pays $222 a month. The Granite State doesn’t have community rating and guaranteed issue.

One proposal to get people into the DirigoChoice system is to reduce the premiums, presumably to give the uninsured a larger incentive to join. But that would explode the program’s costs when it already can’t pay its bills. A program that was supposed to save money by reducing health-care waste and inefficiencies has seen a 74% increase in premiums. But even those inflated payments can’t keep the program out of the red.

Last year, DirigoCare was so desperate for cash that the legislature broke its original promise of no tax hikes and proposed an infusion of funds through a beer, wine and soda tax, similar to what has been floated to pay for the Obama plan. Maine voters rejected these taxes by two to one. Then this year the legislature passed a 2% tax on paid health insurance claims. Taxing paid insurance claims sounds a tad churlish, but the previous funding formula was so complicated that it was costing the state $1 million a year in lawsuits.

Unlike the federal government, Maine has a balanced budget requirement. So out of fiscal necessity, the state has now capped the enrollment in the program and allowed no new entrants. Now there is a waiting list. DirigoChoice has become yet another expensive, failed experiment in government-run health care, alongside similar fiascoes in Massachusetts and Tennessee.

Not everyone sees it this way. Noting the similarities between the Maine program and the Congressional initiative, Karynlee Harrington, the executive director of the Dirigo Health Agency, boasted recently: “DirigoChoice is consistent with what we think the definition of a public health option is.” It certainly is.

From The Heritage Foundation:

Is Healthcare a “Right?”

Sen. Ted Kennedy (D-MA) likes to refer to healthcare as “a fundamental right and not just a privilege.” But what exactly does he mean? Is there really a ‘right’ to healthcare?

Debate over the purported ‘right to healthcare’ has quieted recently. Or rather, with concrete proposals under consideration, ‘rights questions’ have been drowned out by other concerns—things like cost, taxes, the deficit, a “public option,” end-of-life decisions, and so on. But the rights debate is well worth having because the stakes are so high. If Ted Kennedy is correct—if every American has a fundamental right to government-provided healthcare—then we are constitutionally obligated to provide universal health insurance. All the discussion of costs and deficits is beside the point.

The problem is that Sen. Kennedy is wrong; there is no fundamental right to healthcare. When the founders wrote of our “inalienable rights” to “life, liberty, and the pursuit of happiness,” they were referring to natural rights, things that we can enjoy on our own, without depending on government. They exist by nature—they are not entitlements to things produced by others. The rights to life and liberty are individual rights that I can pursue or neglect as I wish. Governments are instituted merely to secure these rights by providing the necessary infrastructure for their flourishing—this involves instituting a rule of law and order, providing for the public defense, and so on.

The idea that healthcare is a right is based on a theory of rights completely alien to that of the founding. Sen. Kennedy speaks of rights as if they are created by government, not derived from the “laws of nature and nature’s God.” According to Kennedy’s thinking, the only way that rights exist is through positive government action; the natural rights theory is both outdated and discredited.

Inevitably, these two conceptions of rights clash. Government must infringe on some citizen’s natural rights to liberty and property to grant benefits to other citizens and, in doing so, making the beneficiaries dependent on government. Over time, as natural rights are subdued to modern, positive rights, we all become dependent on government—this is the direction we are moving in.

This is the basic issue that separates the two schools of thought—whether we are to be equally self-reliant, or equally dependent. Alexis de Tocqueville’s well-known phrase is fitting here: “Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.”

Obamacare: The Maine Experiment

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