Maine’s experiences with government-run health care

By Stephen Bowen | Jul 18, 2009

Mainers looking for some indication of how well the government will run the nation’s health care system, which it will if President Obama gets his way, needn’t look very far.

Proponents of government-run care like to use Canada as an example, where 800,000 people are on waiting lists for care -- a percentage of the Canadian population equivalent to 7.2 million Americans -- but there are examples much closer to home.

Maine’s infamous Dirigo Health program is a good example. Gov. Baldacci’s health care plan was launched in 2003 amid promises that it would cover all 129,000 uninsured Mainers by this year. Today the plan covers fewer than 10,000 people, despite Maine taxpayers having spent $155 million on the program over the intervening six years. Only a third of those enrolled in the program were previously uninsured, with the remainder simply having left their prior health coverage to go on the taxpayer-subsidized Dirigo plan.

So after six years, 3,000 uninsured Mainers have coverage, leaving only 126,000 uninsured. At this rate -- 500 uninsured enrollees a year -- the program should be able to meet its goal of total coverage for the uninsured in 252 years.

Government-run health care proponents claim Dirigo Health has failed so miserably because evil for-profit insurer Anthem administered the program and ran it into the ground. Hardly. From day one the program was poorly designed and far too costly. And when for-profit Anthem was replaced as the program’s administrator by nonprofit Harvard Pilgrim, nothing changed.

Now the Legislature has enacted a permanent health insurance tax to fund Dirigo, costing the average Maine family almost $300 a year. Thus the program can continue to dramatically underperform for the remaining 252 years it will need to meet its health insurance coverage goal.

Dirigo is but a drop in the bucket compared with MaineCare, the state’s Medicaid program. A decade ago, about 160,000 people were enrolled in Mainecare, at a cost to Maine taxpayers of approximately $300 million in state funds alone. (About two-thirds of the cost of MaineCare is paid by the federal government.) Today 270,000 people are on the state-run health plan, almost one out of every four Mainers, and state funding for the program alone tops $600 million a year.

While much of what MaineCare does is determined by the federal regulations by which it is governed, Maine did try a novel expansion of the program, and its experiences with that expansion illustrate as well as the failure of Dirigo Health how badly government runs health care.

In 2002, Maine applied for a special waiver from the federal government to expand MaineCare coverage to what came to be known as the “non-categoricals.” The non-categoricals were given this name because they were not elderly, disabled, children or the parents of enrolled children, which are the four categories of people traditionally covered by Medicaid programs. The non-categoricals were and are non-disabled adults without children, and it was thought at the time that expanding coverage to them would save the state $3 million. The thinking, then as now, was that government-run health care somehow saves money.

Less than a year later, though, the MaineCare program was running a multimillion-dollar deficit, which budget writers solved by cutting access to some medical services and lowering reimbursement rates paid to health care providers. Despite these cuts, costs had risen so much that the number of non-categoricals in the MaineCare program was capped in the spring of 2005 to keep the program from expanding beyond its budget.

Even so, by that October the program’s budget was skyrocketing and the Baldacci administration ordered cuts to the services offered to the non-categorical enrollees. According to published reports, these included cuts to laboratory services, physical and occupational therapy, podiatry, speech and hearing services, and home health services. Mental health services were limited for these enrollees as well.

As if these limits on care weren’t bad enough, health care providers were beginning to turn MaineCare patients away because the state refused to pay for the care they received. In early 2006, the Maine Hospital Association estimated that the state owed hospitals $300 million for services they had already provided MaineCare enrollees.

Facing still rising costs, the Legislature passed a budget in early 2008 that limited prescription drug coverage to those in the non-categorical program, a move that was part of a broader effort to contain MaineCare costs by rationing care. Even these moves were not enough, and the program ran out of money before the end of the fiscal year, forcing it to postpone payments to health care providers. A postponement of payments to providers was also included in a budget bill passed in early 2009, along with cuts in the reimbursement rates paid to hospital-based doctors.

Even these cuts were still not enough. In March of 2009, the Department of Health and Human Services announced that the MaineCare program was facing a $235 million shortfall despite rationing of care and cuts in payments to care providers. That shortfall was filled with one-time federal stimulus dollars from Washington.

So what has been Maine’s experience with government-run health care? For the last decade or so, it has been one of putting more and more people on government programs, then limiting the care those people are able to receive. To control costs even further, the state has repeatedly cut payments to the health care providers, resulting in fewer care options.

Even with all this government meddling to “control costs,” the state’s Medicaid program faces annual budget shortfalls in the tens of millions, and has only been kept afloat recently by timely stimulus money from Washington, borrowed from future generations. So that’s what ObamaCare means for America. Skyrocketing costs, government limits on care options, underpayment to health care practitioners and a growing national debt to be paid for by our grandchildren.

Don’t believe it? The evidence is all around us.
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