BRANCACCIO: Welcome to NOW.
On the road this week in the state of Maine.
Not the fancy Maine of Kennebunkport or Seal Harbor in the summer but the real Maine the one with a lot of people who remain poor despite all their hard work.
I'm here for health reasons, specifically, to look at Maine's innovative experiment to make sure that there's health insurance for everybody, including the working poor.
But brace yourself: it is a government program and that has some conservatives on red alert. William Brangham produced our report.
In a normal world, you come to the emergency room when you break your leg. You come here when you smash your car into a telephone pole. This is not where you come to patch the gaping holes in our country's health care system.
But as the E.R. staff at Eastern Maine Medical Center will tell you, that's exactly what we're doing.
DR. ERIK STEELE:
Emergency departments are how this country copes with the fact that there are lots of people out there who are just not taken care of, because they can't pay, they don't have insurance, or they have very limited access.
BRANCACCIO: Every day Dr. Erik Steele sees the symptoms of a broken health care system. The costs of medical care are shooting through the roof. The price of health insurance is crippling some of the biggest companies in the U.S. And millions of Americans simply cannot afford to pay for the regular, routine care they need.
And so when the uninsured get really sick, they end up here, at the one place where they know a doctor or nurse will see them.
DR. ERIK STEELE:
It's what the country is asking emergency departments to do for a large population of patients who can't get that care someplace else, because they can't afford it. That's just crazy.
BRANCACCIO: On this one point, everyone agrees. This is a crazy way to run a health care system. For Maine Governor John Baldacci, it is a recipe for disaster.
When they do get really sick and they end up going into the emergency rooms without health insurance, all of that expensive care gets to be put on a tax on everybody's health premium. We're paying for it. Massachusetts isn't paying for it. Vermont isn't paying for it. Maine is paying for it. So the better we can reduce those costs on all of us is a benefit.
GOVERNOR BALDACCI, DIRIGO SPEECH:
We in Maine don't wait for some ship to come by from Washington to help us. We build our own ship.
BRANCACCIO: In 2003, Baldacci, who's a Democrat, decided to do something. Taking his cue from the state motto "Dirigo" - Latin for "I lead" -- and with the support of both Democrats and Republicans, Baldacci signed the "Dirigo Health Reform Act."
Dirigo tackles three key things: it tries to keep a lid on the spiraling cost of medical care. It tries to improve the overall quality of the care that people get. And Dirigo tries to get health insurance to more people in the state hereby avoiding some of those costly E.R. Visits.
In designing his plan, Baldacci pulled off an important feat: he got every interested party together: insurance companies, activists, hospitals, politicians. They were all there warily, but they were there nonetheless.
DR. ERIK STEELE:
If the Federal Government, the U.S. Congress had an answer to this, Maine would not be doing this. So when I looked at the Dirigo plan, I thought, you know, here's a Governor who finally has enough gonads, frankly, to stand up and say, 'somebody has gotta do something or you got chaos, and you got a disaster'.
But now, this novel experiment in health care reform is in jeopardy. Sure, it's not perfect. Most agree Dirigo could use some adjustments, but the bipartisan spirit that crafted the law has vanished like last season's snow. Blown away by the hard charging politics of an election year.
Not surprisingly, some of the biggest supporters of Dirigo are the people who signed up for it, people Like John Henderson.
Prior to Dirigo, this former school teacher had no insurance. He works hard, loading boxes in a warehouse, but at ten bucks an hour the cost of a monthly insurance premium was out of reach.
Without Dirigo there's no way that I could be paying an extra, you know, three, four, six, $900 a month to get health insurance. There's, there's just no way, on what I'm earning, there's no way. If I were living on the street, or, or in a tent, I might be able to do it.
BRANCACCIO: Henderson signed up for the part of Dirigo that's gotten the most attention. It's called 'Dirigo Choice', and it is basically a subsidized health insurance policy. You buy a comprehensive policy from Maine's biggest insurer Anthem Blue Cross Blue Shield but get this, you only pay what you can afford pay, based on your household income. The state program covers the rest. The idea is to get people like Henderson back into the system so they don't get stuck going to the E.R. and so they can manage their health better.
In Henderson's case, this is especially important because he has diabetes. When he had no insurance, he had to forgo crucial procedures and prescriptions because they cost too much.
When I have to choose between medications and eating or or rent it makes me a bit angry.
Our health care system is broken. It's just wrong that people that work every day, they pay their taxes, they're trying to raise their kids, they're trying to pay for their educations-- can't have affordable quality health coverage.
BRANCACCIO: Joe Ditre is the head of Consumers for Affordable Health Care, a advocacy group in Maine, and a big supporter of the Dirigo plan. He says that by offering health insurance based on your income, health coverage is no longer just a privilege for those who can afford it.
Along comes Dirigo Health and says we're going to provide you with comprehensive coverage the same coverage everybody else gets, comprehensive coverage based on your ability to pay, your household income. Now just think about that. How many times has-- have an insurance company come to you and said we're going to structure our premiums based on what you can afford? Well, it's unheard of.
BRANCACCIO: Spend some time in Maine, and you'll know why healthcare costs so darn much. Tthis is a big, rural state and its tiny population is spread way out. It's just not efficient to get medicine to those distant corners of the state.
And Mainers are generally older and therefore sicker than the rest of the country. And so they need more of medicine's big ticket items.
The state's economy doesn't help much either. The big canning and shoe-making industries are long gone, taking with them the steady money that guaranteed health benefits to so many residents. The state's economy is now dominated by smaller businesses… often small mom and pop operations that find the cost of health insurance daunting.
Joan Donahue is one of them… she runs a small company called Hummingbird Home Care. Her dozen or so employees provide round the clock care to elderly people in their homes. They do everything from handle medications to making soup.
When Donahue started her business last year, she realized that the sky high cost of health insurance was going to make it hard to hang onto her most crucial asset: her employees.
I had one employee who said, "I want to come with you full time. But my husband and I need the health insurance. And we can't do it if you can't provide the health insurance." So I kept looking, and looking, and looking. And nothing would work.
You're getting really expensive type quotes?
Getting expensive type quotes that they couldn't afford.
BRANCACCIO: Donahue signed up for Dirigo last year and several of her workers have joined the plan. Because of their low incomes, those employees get subsidized policies that cost them each about $70 a month for coverage. That's a lot cheaper than what's on the open market.
That feels doable. I couldn't go to them with anything that wasn't going to be affordable for them. It didn't make sense.
BRANCACCIO: So for the folks who've signed up for Dirigo, it has been a smashing success. But, and there's always a 'but' in these matters, the love only goes so far. Like virtually every health care debate in the country, the big sticking point is money: who is going to pay for Dirigo? Money to subsidize those insurance plans has to come from somewhere.
The governor sold Dirigo on the promise that it's going to save everyone a lot of money, enough money to pay for Dirigo over time.
If the Dirigo reforms work as intended, the insurance companies will save some money. They won't have to pay out certain amount-- as much in claims. And so the way the system is set up, the insurance companies are gonna have to take those savings and what, turn them back to you, the state.
I mean if we wanted to assess taxes or fees, we could have. But the theory was there's enough money within the healthcare system. And if we can rearrange the cost and the priorities, we'll be able to make the savings.
Here's how it's supposed to work: the state government put up $53 million to launch the program. Dirigo's reforms are then supposed to kick in and start saving insurance companies money. Hospitals would be encouraged to control costs. But most of the savings were to come from getting insurance to all those uninsured people and stopping a lot of those costly trips to the E.R. The idea was to somehow figure out exactly how much money these reforms were saving, and then the insurance companies would have to put that money back into Dirigo.
Nwo, that's the theory. But the insurance industry says it is not working.
The premise is flawed because really insurance companies operating on the ground in Maine are not seeing the same amount of savings, and in some cases, no savings.
BRANCACCIO: Katherine Pelletreau represents the insurance industry in the state. She says Dirigo had noble goals, but hasn't lived up to expectations.
The governor projected that about 30,000 people would've signed up for Dirigo in the first year. But the first year's numbers were only about 8,000. The governor had hoped that the lion's share of enrollees would be uninsured people… but they make up less than half of the enrollees.
They're missing their target audience. I mean their target audience is the uninsured, so they haven't been able to attract the audience that would have the greatest impact on the bad debt and charity care. So the savings that they were hoping would materialize through that process, have never really materialized.
But Maine's independent insurance superintendent crunched the numbers. After hearings and much discussion, he calculated that about $43 million dollars had been saved since Dirigo began. But almost all those savings came from hospitals tightening their belts, not from uninsured people signing on to the plan.
But the governor is saying, that is still $43 million dollars that the insurance industry saved because of Dirigo, and he wants those savings put back into the system.
We had a hearing in front of their insurance superintendent who gives them their rate increases, which they never complain about and never question. And now he comes forward and says, "These are the savings that Dirigo's produced." Why aren't they giving those savings back to the citizens of the state of Maine?
You realize of course the insurance industry isn't buying this argument. I sat across with insurance company representative the other day. And they said, "We've looked at the numbers. We don't see the savings."
I recognize that it's difficult for them to part with those resources. But if it goes through a hearing and it's being quantified independently by the superintendent of insurance, those are the people's resources, not the insurance companies' profits.
BRANCACCIO: The insurance companies aren't budging. They've sued the state, arguing that the way these quote-unquote savings were calculated was full of errors. If they're socked with a $43 million dollar bill, the insurers say it's within their rights to pass that cost right on to their consumers in the form of higher premiums.
The fear that Mainers already paying sky high rates for insurance will now have to pay more has given Dirigo's opponents a big cudgel to pound the governor with.
A flurry of negative press has swarmed around this part of Dirigo. Radio ads were run by a Political Action Committee, their Web site calls this fee a 'tax' and a 'sneak attack on Mainers.'
Paul Davis is the senior Republican in the Maine Legislature, and he sits on the PAC that ran those radio ads. He's one of the few who voted against Dirigo initially, but now he represents a growing number of people who think the whole initiative should be scrapped.
Dirigo Health is in its early days. Why not give it some more time. Work from the inside to fix it.
Well, it has been-- when you say early days it's been in existence for over two years, I believe. We've gone through all that money and the results are dismal. How much more-- failure do you want before you start looking at it-- and try to make changes?
Is it in part philosophical issue with you? The way that this is being pursued?
I have always believed that the free marketplace is better than the government trying to do it. Absolutely.
Dirigo Health had very lofty, worthwhile goals. I think what we've seen in reality is it's become a costly disappointment.
BRANCACCIO: Tarren Bragdon works for the Maine Heritage Policy Center: they're part of a network of conservative think tanks around the country, and one of Dirigo's biggest critics.
Just this month, Bragdon wrote in THE WALL STREET JOURNAL that free market solutions are what Maine needs, not more government involvement.
He points out that Maine's insurance industry is dominated by one company, Anthem, the same firm that issues the Dirigo policy. Anthem covers roughly 70% of the market here. Bragdon argues that excessive regulation drove the competition out of town, and that's why premiums cost so much.
Maine government created costly health insurance here in Maine. Rather than correct that situation, Dirigo Health comes along and says "Well, let's have the taxpayer subsidize that costly insurance" rather than saying "Let's regulate it in a more affordable way."
Costs are not high because of regulation. Industries will always argue that regulation is their downfall. The fact is that we're a small state. We have 1.3 million people in the entire State of Maine. Of those, about 700,000 have some form of private health insurance. That's a very, very small market.
BRANCACCIO: Joe Ditre says of course there are some things about Dirigo that should and could be tweaked... But he sees this as an enormous first step in the right direction. Ditre thinks the opposition has a lot to do with an insurance industry that's afraid of a government program that just might work.
They clearly understand that if this program succeeds in Maine, that it will spread to other states in the United States. That will threaten their profits. That will threaten their industry. And basically, they don't want that to happen.
BRANCACCIO: All of this is playing out in perhaps the worst time for a complex policy discussion: an election season.
Governor John Baldacci is up for re-election in nine months, and most of the candidates who've lined up against him think Dirigo is going to be the thing to bring him down.
Back in the emergency room in Bangor. Dr. Erik Steele has the election on his radar.
DR. ERIK STEELE:
When John Baldacci runs in 2006, this year, for Governor, he'll have a lot of candidates who are gonna have a lot of bad things to say about Dirigo, and some of them are gonna be dead on right. Not one of those candidates, if they're elected, will be able to avoid the same problems,
those people are gonna be stuck with the same dilemma, the same harsh realities, and they are going to have to do something.
BRANCACCIO: For more on what states are doing about health care, you can go to our Web site at pbs.org.