Dirigo Health: Maine’s Health Reform Experiment

Tarren BragdonDirector of Health Reform InitiativesMaine Heritage Policy Centerwww.MainePolicy.org207.321.2550tbragdon@MainePolicy.org

Dirigo Health’s Three Parts

Medicaid expansion

DirigoChoice – subsidized insurance product for individuals and small businesses

New State healthcare and health insurance regulations and controls

Dirigo Health’s Three Promises

Eliminate all 135,000 uninsured within 5 years

Be self-supporting with no new taxes or state funds (beyond first year)

Stabilize health insurance premiums and healthcare cost increases

Dirigo HealthDirigoChoice Insurance Product

Available to small businesses (<50), individuals and sole proprietors beginning in January 1, 2005

Minimum 60% employer contribution for employee-only premium (0% for dependent coverage)

Two products - $1,250/$2,500 deductible & $1,750/$3,500 deductible (individual/family)

Premium subsidies for employees earning less than 300% of poverty ($29,400 for individual or $60,000 for a family of four)

Reduced deductibles and out of pocket maximums also based on income

DirigoChoice - The 6 Plans for Employee-Only Coverage – 2005 ratesDirigoChoice - Employee-Only Coverage

2,231 $2,231 $2,231 $2,231 $2,231 $2,231

$300 $600 $888 $1,188 $1,4872,432 $2,135 $1,531 $975 $472

$4,663$4,094 $3,891 $3,718

$4,362$4,666

0

2,000

4,000

6,000

Employee Income:Less than $11,638

Employee Income:$11,638 - $13,965

Employee Income:$13,965 - $18,620

Employee Income:$18,620 - $23,275

Employee Income:$23,275 - $27,930

Employee Income:$27,930+

Employer Portion Employee Portion Taxpayer Subsidy

$250 Deductible

$1,250 Deductible

$1,000 Deductible

$750 Deductible

$500 Deductible

$0 Deductible

DirigoChoice - The 6 Plans for Family Coverage – 2005 rates

DirigoChoice - Family Coverage (family of four)

$2,231 $2,231 $2,231

$1,788$3,564

$5,352$7,140

$8,924$11,759

$9,978 $7,291 $4,699

$2,231$2,2312,231

$2,303

$11,155$13,086

$13,990

$12,282$13,997

$11,674

0

4,000

8,000

12,000

16,000

Family Income:Less than $23,563

Family Income:$23,563 - $28,275

Family Income:$28,275 - $37,700

Family Income:$37,700 - $47,125

Family Income:$47,125 - $56,540

Family Income:$56,540+

Employer Portion Employee Portion Taxpayer Subsidy

$500 Deductible

$2,500 Deductible

$2,000 Deductible

$1,500 Deductible

$1,000 Deductible

$0 Deductible

DirigoChoice Sales to Date–

74% Below Projections

59,800

3,635

31,000

44,300

7,4369,088

0

20,000

40,000

60,000

Jan 05 May 05 Sept 05 Dec 05 Feb 06 Apr 06 Jun 06 Jan 07 July 07

Dirig

oCho

ice

mem

bers

Projected Sales

Actual Sales (through March 1, 2006)

Actual Sales to Small Businesses

Uninsured at purchase

1,666 22%

Previously Insured 5,770 78%

Uninsured Not Buying DirigoChoice Only 22.4% of

those enrolled in DirigoChoice were uninsured at time of enrollment. There was no control group for other insurance plans.

Chart based on 10/1/05 enrollment

Source: Dirigo Health Agency, Muskie Survey

Uninsured covered by Dirigo-Choice1,6661%

Still Uninsured 133,334 99%

DirigoChoice Not Reducing Uninsured – Results of First Year

Dirigo HealthFunding

Assess Dirigo Health’s “savings” to Maine’s healthcare system

Recover those savings through a Savings Offset Payment (SOP) assessed on health premiums and third party administrators – up to 4% of premiums

The Savings Offset Payment

SavingsInitiatives

Bureau of Insurance Deemed Reasonably

Supported

Hospital Savings Initiatives – Voluntary cap

$33.7 million

Uninsured Savings Initiatives – Uncompensated care

$2.7 million

Health Care Provider Fee Savings Initiatives – Medicaid rate increases

$7.3 million

Total $43.7 million

Certificate of Need State Health Plan Capital Investment Fund Insurance Carrier Savings Initiatives –

voluntary caps on underwriting gains Maine Quality Forum

Dirigo Initiatives the Bureau of Insurance Deemed of No Impact

DirigoChoice by the Numbers Cost per enrollee per year $4,191 Paid by individual and employer $2,325 (55.5%)

Taxpayer cost per enrollee $1,866 (44.5%)

Taxpayer cost per uninsured $8,330 (only 22.4% of enrollees)

Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

DirigoChoice by the Numbers At current rate, to reach all 135,000 uninsured in

Maine

Take 81 years (at current rate of 1,666 uninsured per year)

Cost $1.1 Billion (about total annual Maine income tax collections)

Source: Dirigo Health Agency, Dec 2005 figures prorated for one year

Dirigo Health – Lessons Learned Help individuals directly – not certain insurance plans purchased by

individuals working at particular businesses The uninsured don’t all work at one small business (therefore you

can’t reach them by convincing that business to provide a certain health benefit)

Getting a business to move from not offering insurance to providing any benefit is a costly change – don’t have unrealistic employer contribution requirements

Don’t make it complex to administer and understand Premiums matter - 85% of DirigoChoice enrollees choose the

higher deductible plan deciding that even with the subsidies the lower premium-higher deductible was a better value

Don’t fund a program to reach the uninsured by punishing those with private health insurance with higher premiums