Maine's health reform plan is met with cautious optimism

The bold strategy to expand coverage is a risk many are willing to take.

By Joel B. Finkelstein — Posted April 26, 2004

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Washington -- As Maine prepares to roll out the initial stages of Dirigo Health, a sweeping reform of the state's health care system, anticipation is mixed with apprehension.

The goal of the impending reforms is to ensure access to health insurance for all of the state's residents within five years, while at the same time addressing cost and quality issues. The plan calls for achieving this by expanding Medicaid, creating a new and more affordable insurance product, and offering targeted subsidies to low-income residents.

The strategy relies heavily upon the cooperation of physicians, hospitals, insurers and others in the medical community, all of whom have been asked to subscribe to an austerity plan over the next couple of years.

The medical community has agreed to hold price inflation to 3% and to forgo capital improvements for a year.

The success of Dirigo, named after the state motto meaning "I lead" in Latin, hinges on the notion that health care dollars can be redistributed more evenly and efficiently.

"The lesson is, can we get close to complete coverage at a reasonable cost, and can we do it with a financing mechanism that goes beyond the initial allocation of $53 million," said Robert McAfee, MD, who chairs Dirigo Health's board of directors and is a former AMA president.

The $53 million, set aside last year by Maine's Legislature, will fill the gap in funding caused by the transition to a new way of financing the health care system that aims to save money in the long term by providing universal access to preventive services.

Part of the financing vision relies on doctors accepting more Medicaid patients. Although Medicaid is a money loser for Maine physicians, those losses would be balanced by an increase in paying patients and an anticipated end to the need for charity care.

"If you're going to eliminate bad-debt and charity care, it allows you to see more patients under the contractual discounts you have with Medicaid," said Gordon Smith, executive vice president of the Maine Medical Assn.

The Medicaid expansion serves a practical purpose in the overall reforms because it brings in extra federal dollars. However, it also brings some risk.

"Right now the controversial issue in Maine is not Dirigo Health, it's Medicaid -- because we haven't had an increase in rates, for the most part, in 25 years, and now one in every five people in the state is in Medicaid," said Smith. The program currently serves 245,000 resident, but that could jump by 50,000 to 70,000 under Dirigo.

Some fear what will happen if Medicaid expands significantly but private coverage does not. Ultimately, if the plan cannot control Medicaid costs, it could blow up the state budget, which is already deep in red ink, argued Erik Steele, DO, in an editorial to the Bangor Daily News.

Ramping up

Most stakeholders view this as a gamble worth taking because the alternative seems to be sitting idly by as the health system slides into decay.

"I don't want to watch the system go down the tubes and not do a thing," said Maroulla Gleaton, MD, president of the MMA. Gleaton serves on a Dirigo advisory council and sees the panel as an opportunity for physicians to put in their two cents.

"I like the idea of the ability to make some positive input and effect some change with the ability to remain flexible enough to say: 'Well, that worked pretty well, let's continue it, but this didn't work, let's not continue it,' " she said.

Dirigo's board and advisory council will oversee implementation of the health plan and report annually to the Legislature, said Adam Thompson, a special assistant in the Governor's Office of Health Policy and Finance.

At press time, state officials were days away from eliciting bids from private insurers to provide the Dirigo benefit package. Employers and workers opting for the package will pay insurers for the coverage. The government will offer subsidies as necessary to help people afford the plan.

The product is expected to feature a high-deductible, cost-sharing structure. However, coverage will also include no-deductible benefits for preventive services.

There is hope that private insurers will agree to work with Dirigo Health, despite having a tax placed on their profit, said Dr. McAfee. The plan imposes a 4% levy on insurers' profits designed to replace the hidden cost of physician and hospital rates inflated to account for charity care.

The government is scheduled to roll out the benefits package in mid-summer and to enroll 31,000 residents in the first year. Initially, the plan will mainly target small businesses, which make up more than 90% of the state's employers. As Dirigo grows, individuals and then large companies will become eligible to enroll. It is expected to eventually reach 180,000 people.

The plan is unique in its ambition of universal coverage, said Brendon Krause, a senior policy analyst with the National Governors Assn.

"They're combining a lot of different ideas," he said. "Some of it will apply to other states, some of it won't."

Dirigo has borrowed some cost-containment strategies that have worked in other states, said Krause.

Striving for quality

That cost consciousness is behind plans to try to realize new long-term savings through an increased emphasis on prevention and wellness.

Created as part of Dirigo, the Maine Quality Forum will be tasked with assessing those issues, as well as the practice and promotion of evidence-based medicine. For physicians, the state's investment of $1 million in the forum for improving the quality of care brings the hope of healthier patients.

"It costs more up front, but preventive medicine practices in the long haul will mean healthier people and less costly care at the end of life," said Dr. Gleaton. "I think most physicians feel that that's the kind of medicine we should be practicing."

Those are the types of returns that private insurers have generally failed to reap, said Dr. McAfee. "Why should they invest in all this prevention if their bottom line this year is not favorably impacted?" he asked.

If quality and efficiency can work together to improve patient care, then the forum will play an important role in how care is delivered in the state, said Dr. McAfee.

However, the forum and Dirigo need to tread lightly, lest they interfere with the doctor-patient relationship, said Dr. Gleaton. "It depends on how things are done. If they're done in an open, honest and careful manner, then we all win ... and we control costs in the long haul."

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Dirigo details

  • Monthly costs are as low as $260 for a single adult and $780 for a family of four.
  • Preventive services, such as physicals, blood tests, flu shots, mammograms and well-baby care, are covered at 100%.
  • Hospital visits are covered, but a deductible and coinsurance apply.
  • Physician visits are covered; a co-payment is required.
  • Prescription drug coverage with a tiered co-pay is provided.
  • Healthy Maine Rewards Program is launched, with members receiving $100 cash for meeting health goals, such as smoking cessation.
  • Fitness club discounts are offered.

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