Olympia Snowe’s Reason for Supporting Healthcare Reform
After Olympia Snowe voted to pass the healthcare reform legislation out of committee I wondered what she has to gain from it. This national review article provides an excellent reason:
In 2003, Maine created a state-run insurance plan called DirigoChoice (the state motto, Dirigo, means “I lead”), offering subsidized insurance to families earning up to 300 percent of the federal poverty level. Even with the subsidies, enrollment has been far lower than expected. Approximately 10,000 people are currently enrolled in DirigoChoice. Of those, around 3,400 were previously uninsured, representing only 2.5 percent of Maine’s uninsured population. The other 6,600 dropped out of private plans in order to take advantage of the subsidies.
Even though enrollment has fallen short of the state’s goals, the cost of the program has exceeded the state’s ability to pay. The economics are simple: The low-cost program immediately attracted the sickest patients, who ditched their more expensive private plans. The associated costs drove DirigoChoice premiums up by 74 percent, pricing out healthier Mainers. Earlier this year, a small-business owner told the Bangor Daily News that even with the generous subsidies — and even though she offered to pay 60 percent of their premiums — her eight employees still found DirigoChoice too expensive and declined its coverage.
The skewed economics of DirigoChoice have left it highly dependent on government financing, which has created a series of problems for policymakers. The program’s initial funding mechanism was nothing short of bizarre: Each year, the Dirigo Health Agency had to come up with a number that (according to its experts) represented the amount of money DirigoChoice had “saved” the Maine health-care system; the law then required Maine insurance companies to pay that amount to the state. Needless to say, those calculations ended up being something less than rigorous, and the insurance companies objected. Employers argued that insurers were simply passing on the bill for these “savings-offset payments” to private policyholders. Last year, the furor over the payments led the agency to downgrade its savings estimate by $40 million, making the whole process look like an arbitrary sham.
The Democratic legislature tried to replace this funding mechanism with a tax on beer, wine, and soda, but Mainers exercised a “voters’ veto” and repealed this tax via referendum. Running out of money, the legislature went back to taxing Maine insurance companies (and, by extension, private policyholders), enacting a 2 percent tax on all paid insurance claims. The state also has capped enrollment in order to keep costs from spiraling further out of control. The program’s supporters are now looking to Washington for help. “We have a very limited capacity because of limited resources,” Maine Office of Health Policy and Finance director Trish Riley said recently. “With federal money, more people would become eligible and the federal government would require people to have coverage.”
If Snowe voted for reform in part because she wanted to help bail out her state’s program, it would be ironic that she supported legislation at the federal level that clearly will fail financially simply to support a state program that is already failing in just about every measurable way.