SUSAN DENTZER: This is scenic Mount Desert Island, Maine.
DAVID WHITE: A mouth that's supposed to be right here on your car, that isn't.
SUSAN DENTZER: David White has run a repair service for imported cars here for the past 11 years. White, who's 47, says his business has prospered. But a crisis hit last year. White's health insurance company said it would hike premiums 50 percent for White, his three workers and their families.
DAVID WHITE: The total was $47,292 a year, $47,292 a year -- I don't even mind that that would be the cost frankly -- that I have no way of judging what the next ridiculous increase, uncontrollable increase is going to be -- that's the problem.
SUSAN DENTZER: To get by, White stopped paying himself a salary and dropped his own health coverage for a while. He also furloughed one worker and shopped for cheaper health coverage for the rest. Then White wrote local newspapers and joined a statewide advocacy group to push for changes. Among those who responded was Maine's Gov. John Baldacci.
GOV. JOHN BALDACCI: Businesses and workers were coming up to me, telling me about the high cost of health care, that we really had to do something about this, and that if you're going to have a healthy economy, you've got to have healthy people.
SUSAN DENTZER: And that's why Baldacci persuaded Maine's legislature to enact a sweeping health care reform plan just months after he took office this year. The plan is called Dirigo Health.
GOV. JOHN BALDACCI: Our state motto is Dirigo, which is Latin for "I lead." Maine leads.
SUSAN DENTZER: The Dirigo plan aims to provide universal health coverage to Maine's citizens by 2009. That means finding ways to extend insurance to the one in eight Mainers who now lack it. But the plan also seeks to make health care more affordable and cost-effective for all of Maine's 1.2 million citizens.
Baldacci, a Democrat, was able to persuade the majority of Maine's Republican lawmakers to vote for the plan. Republican Joe Bruno is House minority leader.
STATE REP. JOE BRUNO: We do have a health care crisis going on, not only in this state, but nationally. We did not want to be just an obstructionist party. We said we're willing to try it, but it can be a big failure or it's going to be the best thing in the country, and once again, Maine will lead going forward on the health care plan, but there's a lot of skepticism as to whether it's ever going to work.
SUSAN DENTZER: Maine isn't the first state in recent years to enact a major health reform. But Maine's plan may be the most experimental and ambitious. That's because it amounts to a broad attack on underlying causes of the exploding costs of health care.
Many are endemic to the entire U.S. health system. But, if anything, they're more pronounced in this largely rural state. For example, many Mainers are overweight or obese and engage in unhealthy behaviors such as smoking. Partly as a result, they have higher-than-average rates of costly chronic diseases such as cancer, cardiovascular disease and diabetes. Hospital costs are also high in Maine. Steven Michaud is president of the Maine Hospital Association, which represents most of the state's 39 hospitals. We met with him at the state capitol in Augusta.
STEVEN MICHAUD: We have an older population than just about every other state in the country, so it doesn't take too long to put those things together and the geography of the state of Maine, and it's going to be more expensive to do -- to care for people in Maine.
SUSAN DENTZER: And because health costs are high, so is health insurance. Jim Parker heads Anthem Blue Cross and Blue Shield's Maine operation.
JIM PARKER: Health insurance premiums in Maine are, in the aggregate, 25 to 30 percent greater than many other parts of the country.
SUSAN DENTZER: That expense is a key reason 144,000 Mainers lack health coverage. Especially vulnerable is the large corps of relatively low-paid workers employed by small businesses.
JASON LEIGHTON: It's nice and clean. Fifteen hundred bucks.
SUSAN DENTZER: Jason Leighton, 31, now works as a mechanic for David White. But he told us he had no health coverage at all until he took this job.
JASON LEIGHTON: Very uncommon to have health insurance up here in Maine, especially down east Maine. I worked in restaurants 13 years, never had health insurance. Never was offered health insurance, so it's pretty uncommon.
SUSAN DENTZER: Trish Riley is Governor Baldacci's top health policy adviser. She says the fact that so many Mainers are uninsured contributes to a vicious cycle. It starts when many of those without health coverage postpone getting care until they are very sick.
TRISH RILEY: When an uninsured person shows up at the doctor's office or at a hospital, they're cared for. The hospital then raises its rates, passes those rates on as higher premiums in insurance coverage that we all pay.
SUSAN DENTZER: In fact, Maine's hospitals incur $275 million a year in costs to care for the uninsured. That's in outright free care or in bad debts that can't be collected. Governor Baldacci says that when those costs are shifted to others, it raises insurance premiums by 16 percent.
GOV. JOHN BALDACCI: So if you have a program which recognizes, hey, all that bad debt and charity care that's just going out the door, why not work on giving people primary preventative and basic health care, in improving their health, their quality of life and their family's quality of life and your economy at the same time?
SUSAN DENTZER: So the Dirigo plan was constructed to do just that: First, by covering the uninsured. Starting next July, Dirigo will offer a new health insurance product aimed at small businesses and individuals now without coverage. The goal is to offer a comprehensive set of health benefits, including prevention programs to help stem chronic disease. As currently planned, the coverage is to be sold through Anthem and other private insurers in the state.
TRISH RILEY: We'll provide subsidies for the individual, for the employee or an individual, on a sliding-fee scale for those people up to 300 percent of the federal poverty level, which is about $55,000 for a family of four, $27,000 for an individual. So that really cuts into the working poor in Maine pretty effectively.
SUSAN DENTZER: The Dirigo program will get off the ground with a $54 million grant Maine received through a recently enacted federal package of fiscal relief for the states. Eventually, insurers will also make payments to help fund Dirigo. Those are designed to offset the savings those companies are likely to experience as more people gain coverage and hospitals are able to trim their charges.
HEALTH CARE WORKER: Can you ask her...
SUSAN DENTZER: Dirigo has other components, including steps to curb unfettered growth of the state's health care system. The state will ratchet up its regulatory review of hospitals' plans to expand or to add new services.
The state has also persuaded hospitals to agree to a voluntary limit on the growth of their expenses equal to 3.5 percent a year. But meeting that voluntary limit won't be easy, says William Caron. He heads Maine Health, a large statewide health system that includes Maine Medical Center in Portland.
WILLIAM CARON: In the case of Maine Medical Center, there were two major advances that were made this year in cardiac care. When the Medical Center looked at the costs of that new technology in its budget for next year, that was an increase of -- an incremental increase of over $10 million.
SUSAN DENTZER: That's the added cost to provide heart patients with new implantable defibrillators used to correct irregular heartbeats, and so-called drug-coated stents, which are used to open clogged arteries. The technologies are clearly important advances, if costly ones, especially in a state where so many have heart disease. But Caron says adopting them has pushed Maine Medical Center's expense growth above the voluntary limit agreed to under Dirigo.
WILLIAM CARON: The governor and his staff have been supportive. Right now we're not comfortable as a state saying we don't want the procedure.
STATE REP. JOE BRUNO: That's the dilemma we have with Dirigo. Can we afford this? Can we keep caps on prices? Can we control spending and yet give people what they want?
DAVID WHITE: Oh, yeah. Is someone sitting here?
SUSAN DENTZER: Back on Mount Desert Island, we accompanied David White to a Rotary Club meeting to hear what his fellow members had to say about Dirigo health. Bill Weir heads Bar Harbor Savings & Loan. He told us he was a staunch republican.
BILL WEIR: It's new. Whether it's going to work well or not, that remains to be seen. But it's something that's needed.
SUSAN DENTZER: Bob Noonan is a portrait photographer in Bar Harbor. He's being treated for esophageal cancer that has spread to other parts of his body. He had a $10,000 deductible on his health insurance policy when he was diagnosed. Now, he says, he'll be paying off the bills for years.
BOB NOONAN: I applaud the Dirigo plan's goals. I think it's a good start, but I think it's only a start, and until we have national health care, we're really in league with a third world country.
SUSAN DENTZER: For now, though, Noonan, White and their fellow Rotarians say they're happy Maine is moving forward with its plan. They hope the Dirigo state will lead the nation in finding effective ways to tackle the health insurance crisis.