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NOW with Bill Moyers

Transcript - As Goes Maine

JULIE ROVNER: Portland, Maine is the urban center of this decidedly rural Northeastern state. The motto here is "Vacation Land" because Maine is a magnet for tens of thousands of summertime tourists.

But Maine is notable these days for more than its lobsters and lighthouses — this state in some ways offers a glimpse of America's future: an older population, and an economy straining under the momentous costs of medical care.

The shoemaking and canning industries that helped build this state dwindled years ago. Today the state's economy is dominated by small businesses. Ninety percent of the companies here have fewer than 20 employees.

LT's Incorporated typifies this state's economy. It's a screenprinting business in downtown Portland.

K.C. HUGHES, OWNER LT'S INCORPORATED: I think the apparel is really our biggest part of the business.

ROVNER: How big a company are you?

K.C. HUGHES: We have 15 employees, most of the year, and during the summer we have as many as 20.

ROVNER: LT'S is also emblematic of something else that distinguishes Maine — the crushing cost of health insurance.

K.C. HUGHES: We've just seen just incredible rate increases. I think it was 12 percent, 12 percent, and then this year we're looking at a 38 percent increase.

Some companies around us have seen even bigger than 40 percent increases. So — you know — how do you — how do you budget for that if you didn't know it was coming?

ROVNER: To hang onto the policy, Hughes has had to pass on some of these increases to his employees. For a family, the cost is $800 a month, for an individual, it's $300. To many, these costs are simply too much, and they've given up their coverage.

K.C. HUGHES: I know people that can't get insurance, they just can't get it — they can't afford it. They're looking at a $1200 bill a month for health insurance cause they're an individual policy. And I don't — I just can't imagine that. That's like another mortgage, it's an additional mortgage, and how do people pay that?

ROVNER: Health insurance is now the company's third largest expense behind payroll and the mortgage. The monthly bill is over $15,000.

K.C. HUGHES: I just don't even want to look at these numbers. It's just — it's death defying to stay in business. I don't know how people do it. And it will come to a point where we have to just draw the line and say, "We can't do it anymore." Unless something radically changes.

ROVNER: Maine's the first state to see the sunrise every morning. Some say Maine could also be the first state to see something far more ominous, a health insurance meltdown.

JAY HOUGHTON, NURSE, PORTLAND MAINE: The cost of medical care is skyrocketing totally out of control. And that is the bottom line.

ROVNER: Jay Houghton is a nurse at Mercy Hospital in Portland, Maine. Every day, she sees fresh evidence of a system in crisis.

JAY HOUGHTON: Nobody is happy where the situation is. Nobody is happy. I don't think the insurance companies are happy with the situation. Certainly, the patients aren't, certainly the doctors aren't. The hospitals are in dire straits.

Hi, can I take your blood pressure?

ROVNER: Dan and Carolyn Perkins know just how critical health insurance is.

CAROLYN PERKINS: I have an HMO. It's Anthem Blue Cross Blue Shield Maine Partners.

DAN PERKINS: We can't afford to be without insurance ... as expensive as it seems to be for us-we're grateful that we do have it.

ROVNER: Carolyn's surgery today could easily run into the thousands of dollars. But as vital as it is to them, the $300 monthly premium is straining the family's budget.

DAN PERKINS: I can't stand up and say no, I'm not going to pay my premium or I'm not going to give you this money this week because I have to go grocery shopping. You know, that's--it's not an option. We have no options. They say you pay this amount, and we have to pay that amount. Or you will lose your insurance.

When you have no choice, you have no choice. But certainly everyone likes to have an option. And right now our options seem very, very few.

JAY HOUGHTON: It's getting to be that really only rich people are going to be able to afford health insurance. Now, Maine is not a rich state. We are a relatively poor state. And there's really very few families that can afford that kind of money.

ROVNER: Maine's older population makes the state especially vulnerable to the spiking cost of health care. The elderly need more of the medicine's big ticket items — prescription drugs, high tech procedures, and long hospitalizations.

And Maine's small population — just over a million people — is spread across a state that the rest of New England would fit into. That makes delivering health care here less efficient and more costly.

Insurance companies find it hard to make a profit in this state, and many have already left. Those that remain are constantly raising their premiums. But when rates go up, more people drop out. These uninsured strain the system even more, which forces costs up yet again.

JAY HOUGHTON; When you're uninsured you don't go to the doctor, and you go to the emergency room. Now, if anybody's been to the emergency room you know it is the most expensive form of healthcare there is. I had to go once many years ago just for something minor and I--the bills were astronomical. They were astronomical.

ROVNER: Fed up with the current system, Houghton joined a grassroots group that put a referendum on Portland's ballot asking the state to study what's called a single payer system - it's very similar to what Canada does — everyone there is covered by the government, but it's paid for through higher taxes.

JAY HOUGHTON: A single payer system would mean that all that money would go directly into healthcare and not into administrative costs, not into lobbying, not into lawyers' fees, not into physicians' groups or anything else. It would just go directly into paying the bills for healthcare.

ROVNER: It was a non-binding referendum...But that didn't stop major insurers from waging an air war to squash it.

TELEVISION AD: There's gonna be less choice. What doctor am I gonna see? It's a horrible idea…

ROVNER: Dozens of ads denounced the referendum as a recipe for higher taxes and restricted access to doctors. Maine's biggest insurance company, Anthem Blue Cross Blue Shield, poured almost $400,000 into the effort — outspending Houghton's group by almost 20-to-1.

TRISH RILEY: Ads started to come on TV opposing it. Largely supported by insurers and others. And I think in Maine that didn't feel fair. The same insurers that were before the — the rate setting mechanisms of the state to get premium increases, were having money available to oppose a referendum that most people didn't even know was gonna be on the ballot. And I think it just, Maine's a state where fairness matters. It's not fair that some people have to pay this much for their health care and they didn't think that was fair.

ROVNER: Despite the intense campaign, the referendum passed - albeit by a very slim margin — 52 to 48.

Maine probably can't implement a full-fledged single payer system even if it wanted to — a federal law blocks states from regulating many employer health plans. But people here fully expect the state will do something to ensure that every citizen who wants health insurance can get it.

Maine's legislature has a feisty streak of health care activism — its latest cost control effort was trying to force pharmaceutical companies to lower prices statewide — that foray landed them in federal court.

But Maine has also become a symbol of the growing agitation in America over the state of our healthcare system — and of the debate about how to best control the spiraling cost of medicine.

JIM PARKER, VICE PRESIDENT OF ANTHEM BLUE CROSS, BLUE SHIELD: Medical technology has given us capabilities within the health care field, you know, that three years, five years ago, certainly ten years ago were unheard of and never thought of.

ROVNER: Jim Parker is Vice President of Anthem Blue Cross, Blue Shield. He sees spiraling costs as a real problem, but says they're the result of us getting just what we asked for: the best that modern medicine has to offer.

JIM PARKER: The pharmaceutical industry has over 400 patents--400 prescriptions in the patent pipeline, many of which, you know, hold great promise for--for those in need of them. And so, we're in this awkward time in which we've created a — where we've painted a medical opportunity that perhaps could be beyond society's stomach for paying for.

ROVNER: The undeniable benefits of this medical and pharmaceutical boom come with one considerable drawback — nearly forty million Americans who can't afford to pay for them.

And so the debate in Maine really is the nation's debate — who's going to be responsible for balancing what we want out of medicine with what we're willing to pay for?

HOWARD BUCKLEY, PRESIDENT OF MERCY HOSPITAL: Everybody says oh, I'm sure we can fix it — you know we'll cut this a little — we'll cut a position here -position there. And I'm saying you know it just can't be done. That it is time for a drastic overhaul of the system.

ROVNER: Howard Buckley is a rather unlikely convert to government intervention in health care. He's the President of Mercy Hospital, a registered Republican, and a forty-year veteran of profit-driven healthcare. But he changed his mind when came to the conclusion that the interests of business and the interests of medicine had become incompatible.

HOWARD BUCKLEY: If you're a managed care company, you make your money by denying coverage to patients. If you do that, you make money. If you slow the payment process down, you make money. The incentives are very perverse and certainly are not in the best interests of the patient.

The whole concentration has been on the business aspects of providing care and not on what the true calling was of providing a service to people who are sick and are in need.

JAY HOUGHTON: We believe that healthcare is a human right for the public good. Something that touches everybody's lives, but that they cannot handle for themselves. For instance, our public highway department, our public transportation, police and fire protection, Coast Guard, that kind of thing--all of these things directly touch our lives, but we can't handle each on our own.

So, it can't be run like a business. Healthcare is not the same as an automobile or a computer. And we really feel that the whole healthcare system has got to be removed from the marketplace.

MARK CENCI, HEAD OF Maine's LIBERTARIAN PARTY: You can't say that market rules like supply and demand have no bearing whatsoever on healthcare. The problem with a universal healthcare system is that the demand is infinite. But the supply has got to be limited.

ROVNER: Geologist Mark Cenci is the head of Maine's Libertarian Party. He agrees the system is broken, but rather than the government stepping in, he thinks that medicine needs more of the discipline only the marketplace can provide.

MARK CENCI: And rather than take health care completely away from market forces, which would happen with a government-run program, tax-funded, we need to at least keep some crucial market forces at play in health care markets.

PRESIDENT BUSH (FROM TAPE): So here's what I propose. I propose we give workers more choice. I propose we reform the system-

ROVNER: This is the hot idea in Washington DC today — letting individuals spend their own money in the medical marketplace.

PRESIDENT BUSH (FROM TAPE): To make the system more individualized, by creating personal health accounts... ROVNER: Conservatives say if we really knew how much things cost, we'd rein in our spending and force healthcare providers to lower their prices.

PRESIDENT BUSH (FROM TAPE): The money is your money. It's your money in the health account, not the government's money. And you can use it for whatever health care need that arises. If you don't use it, it's yours to keep.

ROVNER: The ideas are simple, if revolutionary. Instead of providing comprehensive insurance, employers would provide workers with policies that cover only the most extraordinary costs — and give them a set number of dollars to spend on more routine care.

MARK CENCI: I think that if you're — faced with a situation of where you, you are going to be spending your own money and not assuming that everyone else is paying for your health care needs, that you will become more of an active consumer — just like every other aspect of our lives, be it a pur — car purchase or computer purchase or clothes or food — yes, you will be more vigilant, and you will be looking for the best products at the best prices.

ROVNER: The goal is the same — make sure everyone can get the care they need. Policy analyst — and Maine resident — Trish Riley says Mainers are fed up enough to do something dramatic.

TRISH RILEY: I think people in Maine want universal coverage. We live in the shadow of Canada. We certainly know the problems of access in Canada. But there's something that seems right to people here. That because you live in a state, everybody should get access to the same kind of health care.

ROVNER: Regardless of what reform measure you propose, everyone says they're in favor of better, cheaper medicine for all Americans. But no one ever seems to reach agreement on a foolproof way to fix the system.

TRISH RILEY: I think what's kept us all over the country from dealing with this issue isn't lack of good ideas. It isn't lack of good people. It's lack of will. We're just afraid to make the commitment 'cause it's big change and it's big money.

ROVNER: The real question is whether what's stirring in Maine is just a product of this state's unique circumstances, or whether this debate will spread to the rest of the nation. If it does, then we could face a return to the bruising fight that embroiled the country a decade ago.