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Maine Seeks Escape from Its Own Obamacare-like Problems
Posted By Margot Crouch On July 22, 2011 @ 6:45 pm In Health Care | 4 Comments
Maine is one of the noteworthy states that worked on state health care reform in the spring legislative session. For years, Maine has suffered under poor health policy—leading to fewer insured, skyrocketing premiums, and few coverage choices. Last week, Governor Paul LePage (R) spoke to an audience  at The Heritage Foundation about the need for state innovation and free-market solutions instead of a federal government takeover of the health care system. In his comments, Governor LePage pointed out that the diversity of states is a critical consideration in health care reform.
Reinforcing the Governor’s view, a recent Rasmussen poll  shows that “56% of likely U.S. voters say letting states compete to determine the most effective standards and guidelines would do more to reduce health care costs than having the federal government involved.” Additionally, the poll showed only “33% believe having the federal government establish a single set of standards and regulations would be more cost effective.”
In a recent Heritage paper , Tarren Bragdon and Joel Allumbaugh outline the past failed policies in Maine, how they are similar to Obamacare, and how recent reforms will point Maine’s health care system in a better direction. Strict guaranteed issue and community rating rules are among the harmful policies Maine is trying to move away from. Guaranteed issue requires all insurers to issue coverage to all individuals applying for coverage, regardless of health condition or status, and strict community rating restricts premiums from varying significantly by age and geography.
While these rules are intended to make insurance available and affordable to everyone, in practice, the results are the exact opposite. Bragdon and Allumbaugh explain that these restrictions cause “carriers to reduce rates for older individuals while significantly increasing rates for young adults. However, because most young adults are in good health and tend to have lower incomes, artificially increasing their cost of coverage induces more of them to become or remain uninsured.”
The next big failure in Maine was the implementation of the Dirigo Health Reform, which was aimed at achieving universal health coverage. Among its provisions was a dramatic expansion of Medicaid with the creation of DirigoChoice. Bragdon and Allumbaugh write  that DirigoChoice was a “state-designed privately administered health plan with premium and deductible subsidies based on family income.” These subsidies are similar to the Obamacare subsidies  for low-income and middle-income Americans to purchase insurance. As Governor LePage pointed out , Dirigo Health was a huge disaster. Not only did the subsidy program spend more than $183 million starting in 2005, but it also resulted in more uninsured people today than when it was created in 2003.
On top of those dismal results, Maine’s individual insurance market has declined significantly since the previous “reforms” began in 1993. According to Bragdon and Allumbaugh , “Maine’s individual market has gone from covering 102,000 to covering just 57,000 in 2009, a 44 percent drop…premiums and deductibles skyrocketed. Essentially, insurance became priced for—and therefore only attractive to—the oldest and sickest enrollees.”
Maine residents pay considerably more in premium costs than their neighbors in nearby states. Governor LePage claimed  that what works for Maine’s neighbors to keep costs lower could work for Maine, too. Under the new reforms, the ability to purchase insurance across state lines will allow Maine to achieve the same affordable prices as its neighbors. Bragdon and Allumbaugh argue  that the ability to purchase insurance across state lines is good for two reasons: “it increases competition and choice for Maine residents buying insurance on the individual market [and] it protects Maine consumers from premium increases driven by additional benefit mandates or costly regulations added by future Maine legislatures.”
Bragdon and Allumbaugh conclude,  “Maine’s experience with the costly failures of a big-government, command-and-control approach to health care reform is a salutary warning of the likely adverse effects of similar provisions in Obamacare.” However, Maine’s latest efforts in health care reform show promise of achieving affordable health coverage by moving towards free-market solutions. To learn more about Maine’s health reform experience, check out Bragdon and Allumbaugh’s report.  Also, make sure to watch Governor Paul LePage’s full remarks on health care. 
Article printed from The Foundry: Conservative Policy News Blog from The Heritage Foundation: http://blog.heritage.org
URL to article: http://blog.heritage.org/2011/07/22/maine-seeks-escape-from-its-own-obamacare-like-problems/
URLs in this post:
 Governor Paul LePage (R) spoke to an audience: http://www.heritage.org/Events/2011/07/Paul-LePage
 a recent Rasmussen poll: http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/july_2011/56_think_competing_state_standards_more_likely_to_lower_health_care_costs
 recent Heritage paper: http://www.heritage.org/Research/Reports/2011/07/Health-Care-Reform-in-Maine-Reversing-Obamacare-Lite
 are similar to the Obamacare subsidies: http://blog.heritage.org/2011/06/22/breaking-research-obamacare-tax-subsidies-a-drag-on-the-economy/
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