Dirigo Health: Maine’s Health Reform Experiment

1. Dirigo Health: Maine’s Health Reform Experiment Tarren Bragdon Director of Health Reform Initiatives Maine Heritage Policy Center www.MainePolicy.org 207.321.2550 tbragdon@MainePolicy.org

2. Dirigo Health’s Three Parts • Medicaid expansion • DirigoChoice – subsidized insurance product for individuals and small businesses • New State healthcare and health insurance regulations and controls

3. Dirigo Health’s Three Promises • Eliminate all 135,000 uninsured within 5 years • Be self-supporting with no new taxes or state funds (beyond first year) • Stabilize health insurance premiums and healthcare cost increases

4. Dirigo HealthDirigoChoice Insurance Product Available to small businesses (<50), individuals and sole proprietors beginning in January 1, 2005 Minimum 60% employer contribution for employee-only premium (0% for dependent coverage) Two products - $1,250/$2,500 deductible & $1,750/$3,500 deductible (individual/family) Premium subsidies for employees earning less than 300% of poverty ($29,400 for individual or $60,000 for a family of four) Reduced deductibles and out of pocket maximums also based on income

5. DirigoChoice - The 6 Plans for Employee-Only Coverage – 2005 rates

6. DirigoChoice - The 6 Plans for Family Coverage – 2005 rates

7. DirigoChoice Sales to Date– 74% Below Projections

8. Uninsured Not Buying DirigoChoice • Only 22.4% of those enrolled in DirigoChoice were uninsured at time of enrollment. There was no control group for other insurance plans. Source: Dirigo Health Agency, Muskie Survey Chart based on 10/1/05 enrollment

9. DirigoChoice Not Reducing Uninsured – Results of First Year

10. Dirigo HealthFunding Assess Dirigo Health’s “savings” to Maine’s healthcare system Recover those savings through a Savings Offset Payment (SOP) assessed on health premiums and third party administrators – up to 4% of premiums

11. The Savings Offset Payment

12. Dirigo Initiatives the Bureau of Insurance Deemed of No Impact • Certificate of Need • State Health Plan • Capital Investment Fund • Insurance Carrier Savings Initiatives – voluntary caps on underwriting gains • Maine Quality Forum

13. DirigoChoice by the Numbers • Cost per enrollee per year $4,191 • Paid by individual and employer $2,325 (55.5%) • Taxpayer cost per enrollee $1,866 (44.5%) • Taxpayer cost per uninsured $8,330 (only 22.4% of enrollees) Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

14. DirigoChoice by the Numbers • At current rate, to reach all 135,000 uninsured in Maine • Take 81 years (at current rate of 1,666 uninsured per year) • Cost $1.1 Billion (about total annual Maine income tax collections) Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

15. Dirigo Health – Lessons Learned • Help individuals directly – not certain insurance plans purchased by individuals working at particular businesses • The uninsured don’t all work at one small business (therefore you can’t reach them by convincing that business to provide a certain health benefit) • Getting a business to move from not offering insurance to providing any benefit is a costly change – don’t have unrealistic employer contribution requirements • Don’t make it complex to administer and understand • Premiums matter - 85% of DirigoChoice enrollees choose the higher deductible plan deciding that even with the subsidies the lower premium-higher deductible was a better value • Don’t fund a program to reach the uninsured by punishing those with private health insurance with higher premiums