Maine governor signs health care legislation

By GLENN ADAMS , 06.10.09 Associated Press AUGUSTA, Maine -- After signing a bill that uses a new funding mechanism for his prized Dirigo program, Maine Gov. John Baldacci praised the Legislature on Wednesday for enacting that and several other laws he said will go a long way toward improving health care for Mainers. "Taken together, these bills will help advance the broad goals of the original Dirigo reforms to make quality, affordable health care available to all Mainers and to work to make Maine the healthiest state in the nation," Baldacci said at a news conference after signing several of the bills. Among them is one that replaces the funding mechanism for the subsidized health care program Dirigo, which Baldacci has championed since its start in 2003. The new law replaces the savings offset payment, now assessed at a variable rate of up to 4 percent of paid claims, with a fixed 2.14 percent payment on claims paid monthly. The new fixed rates will replace fluctuating savings offsets payments, which drew court challenges by the health insurance industry. By stabilizing the funding stream for Dirigo, the state will avoid costly litigation and open the door to more people who need health coverage, said Joseph Ditre, executive director of the advocacy group Consumers for Affordable Health Care. Other newly enacted bills establish medical school scholarships for Maine students, enhance telemedicine services and improve health care transparency. They also expand health coverage for temporarily laid off workers of small firms, take steps toward a universal wellness program and take steps to screen patients at Maine hospitals for infections that pose a risk to other patients. A bill still facing final votes would establish a Maine Health Care Bill of Rights, which would require that insurers give people more information about their health care plans before they face unexpected medical bills. Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Both sides misleading public on Beverage Tax-Dirigo Health issue

published in Kennebec Journal Thursday August 7, 2008 by Dan Billings In November, Maine voters will decide whether to veto a package of taxes passed to fund Dirigo Health, Maine's subsidized health insurance program. Veto proponents claim the vote is about high taxes. Veto opponents claim the vote is about affordable health care. Neither claim is true. Dirigo is available to Maine small businesses, the self-employed and individuals. Dirigo was intended to provide affordable coverage for Maine's approximately 140,000 uninsured. But after five years, Dirigo's actual enrollment is only only about 12,300 -- well short of the program's first-year goal of providing coverage to 31,000 Mainers. Since its passage, Dirigo has been funded through the so-called Savings Offset Payment. Through a complicated, expensive and contentious process, the Dirigo Health Agency estimates the savings to Maine's health care system resulting from Dirigo. The entire value of the savings, or as much as 4 percent of paid medical claims -- whichever is less -- must be paid by health insurance carriers and administrators. Four percent of paid claims for 2007 is estimated to be $80 million. The amount of the Savings Offset Payment is set each year by the insurance superintendent. Through Dirigo's history, the amount set by the superintendent has been less each year than the amount sought by the Dirigo Health Agency. The payment was $43.7 million in 2004; $34.3 million in 2005; and $38.2 million in 2006. The limited funding has capped Dirigo's growth and frustrated Dirigo supporters. Recently, the Dirigo Health board voted that the amount saved in Maine's health-care system in 2007 due to Dirigo was $149.8 million. If that figure is accepted by the insurance superintendent, the Savings Offset Payment for the coming year would be set at the maximum level of 4 percent of claims and bring in about $80 million. Since the level of the Savings Offset Payment was last set, Gov. John Baldacci appointed a new insurance superintendent, Mila Kofman. She testified in favor of Dirigo's passage and is expected to set the Savings Offset Payment at the maximum level. To eliminate the problems with the Savings Offset Payment and to provide stable funding for Dirigo, the Legislature passed a package of taxes this year to replace the controversial payment. The package includes a new wholesale tax on soda, flavored water, sports drinks, syrup and other beverages; a doubling of the tax on beer and wine; and a new fixed 1.8 percent tax on insurance claims. Dirigo supporters claim that this package will bring in $57 million per year while opponents of the new taxes claim the package will bring in $75 million per year. The businesses targeted by the taxes quickly organized a people's veto effort to bring the taxes to voters. An effort paid for primarily by beer and soda bottlers collected 75,000 signatures that are under review by the secretary of state. With a cushion of more than 20,000 verified signatures, the effort is almost certain to result in the veto being on the November ballot. Though the campaign is just beginning, the battle lines have already been drawn. Veto proponents focus their argument on taxes. They call their coalition "Fed Up With Taxes" and say that the issue is taxes and raising taxes during tough economic times. Veto proponents hope to attract voters frustrated with Maine's tax burden and those nervous about the economy. Veto opponents focus their argument on health care. They call their campaign "Health Coverage for Maine" and claim affordable health care for 50,000 Mainers is put at risk by the veto. They hope to attract voters concerned about the cost of health care and health insurance. Neither campaign is being honest with voters. The truth is that if the new taxes are vetoed, the Savings Offset Payment will remain in effect to fund Dirigo. The payment, which is a tax given another name, will bring in approximately the same amount as the taxes targeted for veto. As a result, neither the funding for Dirigo nor the amount of taxes Mainers pay is at issue. Dirigo will be funded and Mainers will pay the same in taxes no matter the result of the veto vote. In reality, the only thing at issue is how the taxes to fund Dirigo will be collected. So what should a voter do when both sides of a referendum campaign spread misinformation? My advice is ignore them. The people's veto is the least consequential contest on the ballot. Your time is better spent on the other choices to be made in November. Dan Billings is a Republican activist and commentator. He practices law in Waterville. He can be reached at dib9@aol.com.

Dirigo Health featured at Hearing in Washington, DC

Maine's Dirigo Health Reform Highlighted in Federal Hearing WASHINGTON, D.C. – Maine's experience in pursuit of universal health coverage was a focus of a congressional hearing this morning. The House Ways and Means Health Subcommittee invited Trish Riley, Director of the Governor's Office of Health Policy and Finance, to deliver testimony during a hearing on state health care coverage initiatives. The Subcommittee, chaired by Congressman Pete Stark (D-CA), asked Riley to discuss how Maine enacted and implemented its own version of health reform, and to assess the difficulties in achieving universal health care and the need for national leadership in health reform. Riley, representing Maine, was one of two state officials who provided oral testimony. Massachusetts' Secretary of Health and Human Services, JudyAnn Bigby, M.D., also spoke at the hearing. A third member of the panel, Jack Lewin, M.D., Chief Executive Officer, American College of Cardiology, had served as Director of Health for the State of Hawaii from 1985 to 1994.In her testimony, Riley noted the political difficulty of funding universal health care. She also stated that while coverage is a key goal of Maine's Dirigo Health Reform, this must be pursued in tandem with efforts to reduce health care costs for all while increasing quality. Maine's Dirigo Health Reform effort addressed "an inefficient health care system which led to unaffordability of health insurance and a growing number of people who were under - and uninsured," Riley said.Since Dirigo Health Reform was implemented, it has achieved $110 million in documented savings by the Superintendent of Insurance. This year the Maine Legislature created an alternative funding mechanism for Dirigo Health and implemented new reforms in the independent insurance market. The new funding method for Dirigo is being challenged and may appear on the ballot this November.Riley's written, submitted testimony follows. For more information on the hearing, including testimony of the other presenters, please see http://waysandmeans.house.gov/hearings.asp?formmode=detail&hearing=640 Statement of Trish Riley, Director, Maine Governor's Office of Health Policy and Finance, Augusta, Maine Testimony Before the Subcommittee on Health of the House Committee on Ways and Means July 15, 2008 Thank you for this opportunity to talk with you about lessons learned at the state level about health care reform. Perhaps the most important lesson about state health reform is that it comes in waves, each building on the lessons of the past and learning from the challenges states find in building sustainable health reform over time. But each wave ultimately collides with the critical question – who pays? I have been fortunate to have been directly involved in many of these efforts as a former Medicaid director and to have worked closely with the reforming states in my service over the past several decades with the National Academy for State Health Policy. Enactment of Medicaid in the 1960s was arguably the beginning of state health reform, although the initial wave of state initiated reform began in the 1970s when Hawaii enacted the first mandate requiring most employers to offer health coverage, advanced soon after President Nixon's health reform -- that included a similar provision – had failed. In the decade of the 1970s the first high risk pools were created. In the 1980s Washington State established the subsidized Basic Health Plan, Massachusetts enacted the Health Security Act and Oregon created the Oregon Health Plan. Children's health plans began in Minnesota and Vermont. By the early 1990's 46 states had adopted insurance reforms, children's health programs grew in other states and Medicaid waivers yielded Arizona Access, TennCare and RiteCare, Medicaid managed care based programs to expand coverage. Each of these initiatives had their advocates and detractors, some failed, some changed, most held on in some form but following the failure of the Clinton health plan in the early 1990's state action again stalled and states were in the ebb of a third wave of reform.In 2003, Maine led the fourth wave with the establishment of our Dirigo Health Reform. Our approach was comprehensive health system reform, focusing on affordability and driven by Maine's per capita health spending, which ranks the second highest in the U.S., by then the highest rates of uninsured in New England, decline in employer sponsored plans and by limits in state budget capacity. In 2002 state and local revenues in the United States had the slowest growth since records were kept. Absent any sustainable, new sources of revenue, Governor Baldacci sought to achieve health reform by improving the efficiency and effectiveness of the health care system. By improving the system's efficiency, savings would be created and reinvested in health care access. Clear goals are important: "Covering the Uninsured" is not the same goal as "making sure every man, woman, and child has access to affordable, quality care". Covering the uninsured generally implies that we will find adequate financing to bring those now without coverage into the insured tent - covered through one or more of the myriad of coverage options available today or by creating special plans for the uninsured. Such an approach generally accepts the status quo in how care is delivered and coverage provided. But with growing pressure on the affordability of our employer based system, more costs are shifted to employees and coverage can become less comprehensive. As a growing number of people use more of their incomes for sometimes less coverage, more people are underinsured - forestalling needed care for fear of incurring out of pocket costs they cannot afford. And the literature is filled with data documenting concerns with quality of care. Our goal of assuring every man woman and child has access to affordable; quality care seeks to provide health security for all - those without coverage; those with inadequate coverage and those who fear rising costs will jeopardize their coverage.Numerous studies have documented that the U.S. spends far more than other developed nations yet we leave 47 million uninsured and do not achieve better health outcomes or quality for that additional investment. In fact, we pay for redundancy, inefficiency, variation and oversupply. Recently, McKinsey Global Institute published "Accounting for the Cost of Health Care in the United States" that concludes that even after adjusting for its higher per capita income levels, the United States spends some $477 billion more on health care than peer countries. McKinsey notes that higher health spending in the U.S. is not explained by higher disease burden but by these factors: 1. Higher input costs – salaries, drugs, devices and profits, (e.g.: we use 20% fewer drugs yet pay 50-70% more for them and we are the largest consumers of medical devices in the world). 2. Inefficiencies and complexity in the system's operational processes (e.g.: we have 3-6 more scanners than Germany, UK, France and Canada). 3. Costs of administration, regulation and intermediation of the system.McKinsey's study reinforces Maine's approach to comprehensive, system reform, stating "most components of the US health care system are economically distorted and no single factor is either the cause or the silver bullet for reform". While it is unlikely that Americans, who value choice, will adopt all the provisions that make other countries' health care more affordable, unless Americans are ready to embrace higher costs and a greater investment of our GDP in health, then the cost issues must be addressed head on. In crafting the Dirigo Health Reform, Maine's strategy was to affect cost, quality and access together, reflecting our conclusion that we had an inefficient health care system which led to unaffordability of health insurance and a growing number of people who were under - and uninsured. We built the program by expanding Medicaid for the poorest of our citizens, establishing a subsidy program for those just beyond Medicaid eligibility; launching comprehensive activities to improve health and reduce the costly burden of chronic disease; creating the Maine Quality Forum to remediate costly variation in the system; initiating a variety of cost containment mechanisms; requiring medical loss ratios in the small and non-group markets; increasing transparency through price posting and standardized reporting by insurers and hospitals; supporting electronic medical record diffusion; strengthening certificate of need; establishing a capital investment fund as an annual budget for new capital investment and facilitating collaboration among providers. Our cost containment goal is to assure coverage remains affordable for those who buy it privately but subsidizing health coverage remains a tool to meet the affordability gap for those with lower incomes. The foundation of Maine's coverage expansion was Medicaid. From that base we built a sliding scale subsidized insurance plan, DirigoChoice, targeted to those 3 times the poverty level who were employed in small businesses with fewer than 50 employees, were sole proprietors or individuals – categories that include the majority of uninsured - and built the reform on the employer based system. Specifically, the plan pooled small businesses to achieve economies of scale and purchasing power and adopted medical loss ratios in the small group and individual market to help make those markets more affordable. DirigoChoice is a voluntary program, recognizing that unless and until insurance became more affordable, mandates would not be tolerated. The program is financed through an assessment on insurers and those who administer self- insured plans that can only be levied if Dirigo's comprehensive reforms result in documented savings. When the Dirigo Health Reform began in 2003, Maine had the highest rate of uninsured in New England. In the years following, as Medicaid expansions took hold and DirigoChoice became the fastest growing product in the marketplace, every New England state saw its rate of uninsured increase; only Maine saw its rate fall to the lowest in the region by 2006. But our progress has stalled, lacking adequate financing. While $110 million in savings has been independently documented since the program began, those savings have been contentious, subject to court challenge and highlight the complexity of cost containment in health care. Payers of the surcharge assert that reducing the rate of growth of health care costs is not the same as cost savings. The Legislature enacted alternative financing this session, including taxes on beer, wine and sugared beverages, but this alternative is also being challenged. Politics Trumps Policy –The process of enacting and implementing reform is as important as the reform. To launch Maine's reform, stakeholders were convened in a Health Action Team that met often and in public to guide the Governor's office in developing the original proposal. The Legislature created a Special Joint Committee on Health Reform with bipartisan members from the health, insurance and appropriation committees.The reform debate played out largely between two camps - those who wanted de-regulation and market based solutions like high risk pools, arguing that lower costs would assure more coverage and others who wanted more investment to sustain comprehensive coverage to cover all the uninsured. Long negotiations resulted in significant amendments to the original bill and found a middle ground that won a unanimous committee report and strong bi-partisan support in both chambers. Both the Health Action Team and the Joint Committee were dissolved once the bill was enacted. Numerous commissions, workgroups and an independent Board of Trustees for the Dirigo Health Agency assured citizen input throughout the implementation of the reform, but each group was responsible for a part of the reform only. In hindsight, with oversight of the reform split among different legislative committees and no one single stakeholder group to provide guidance for the overall reform, a vacuum was created that allowed the parties to "return to their corners" when the inevitable implementation challenges occurred. Amendments to the original bill, that eliminated a planned global budget and a fixed assessment that could not be passed on to premium payers, reduced the ability to generate stable, predictable funding and attain the amount of cost savings initially envisioned. As the program was launched, additional revisions were required that further challenged the ability to meet enrollment target timetables developed with the original legislation and never revised. Rather than recognize that these unexpected factors would slow but not deter program enrollment, proponents of alternative strategies quickly declared Dirigo a failure and revived advocacy for their favored market based reforms, which created a challenging environment for program modification and mid -course improvements. As Maine's experience clearly shows, enacting health reform is tough enough - few states have done so - but implementing reform is even tougher. The devil is indeed in the details and health reform is a work in progress. But to achieve that progress, all parties, with strong leadership, need to commit to it and to work together to make mid course corrections rather than to see each bump in the road as an opportunity to defeat reform. Medicaid is a critical component for state- based reform but needs reliable, counter cyclical financing and clarity in its coverage for eligible, employed beneficiaries. Should national health reform maintain the current employer based system, Medicaid's role will remain critical. Medicaid is the essential building block in state health reform and is of paramount concern to the states and to Congress. As states face recessions and budget challenges, Medicaid's funding formula needs to keep pace with rising costs and demand. Since de-linking welfare and Medicaid eligibility and imposing work requirements, an increasing number of low wage and particularly part-time workers, work each day in firms large and small, and qualify for Medicaid - often ineligible for or unable to afford workplace coverage. The premium assistance provisions within the Medicaid program are difficult to administer, pay only for employee share of premium and require state match. Additional policy debate needs to address where the role of the Medicaid program ends and the role of the private employer begins. As costs escalate, private employers are increasingly reluctant to offer coverage to part-time workers and to make Medicaid eligible employees part of their workplace health plan. On the one hand, employers face difficult trade offs as the costs of health care grows. Increasingly employer- based coverage has passed more and more cost on to employees. As lower wage employees pay a larger part of their incomes for health care, we are witnessing a new and growing problem of underinsurance. But employers must balance the costs of health care against the ability to create jobs or increase wages and states need to be cautious in what demands they place on the very employers who assist in "welfare to work" programs or who, subject to state regulations they find intolerable, self insure, and abandon the consumer protections of the fully insured marketplace. A design feature of the original Dirigo Health Reform sought to pool all revenues to the Dirigo Health Agency( employer contributions, employee contributions and others), and use those pooled state resources to match Medicaid for eligible employees and their dependents. CMS has rejected our approach, which will soon be reviewed by the courts. The states that followed us in this fourth wave of state health reform relied heavily on Medicaid, unlike Maine which coupled system savings with program financing. Vermont accepted federal flexibility in exchange for a block grant - like approach to Medicaid. Massachusetts built its program with $400M in Medicaid funds that had been supporting their uncompensated care. We appreciate the strength of Vermont's initiative but find the block grant approach, which abandons a long established health care entitlement program, to be counter- intuitive to efforts to expand access and, like most states, we did not have access to the Medicaid funds now supporting Massachusetts' landmark reform. It's time for a national policy to achieve affordable, quality health coverage for all. States serving as laboratories of innovation have gained public attention and achieved much, filling a void in the absence of national reform. The laboratories of democracy were at work testing reforms reflected in later Congressional action. Many states had adopted insurance regulations before HIPAA was enacted; had well running children's health programs before SCHIP was born and developed Patients' Bills of Rights before Congress took them up. The many and varied state experiments have been operational since at least the early 1970's. While states have done extraordinary work to lay the foundation for reform, each state is operating relatively independently based on very different health systems, coverage and costs and reflecting different state priorities. While experimentation has generated significant reforms, it has also created state- to -state variation that may also account for fragmentation and complexity across the country which drives costs. Over three decades of state health reform, and the reams of studies and evaluations analyzing them, suggest to me that it is time to get out of the laboratory and learn from decades of state experimentation. This is certainly not to say that there will not be a role for the states in any emerging national health reform but that a national solution-and national financing - is essential. We cannot reform our health system piecemeal or even by further state by state imitative. In the spirit of federalism, the national government must commit to a national policy that achieves affordable, quality health care for all of us.We need a national policy that makes the roadmap clear that will achieve the reforms needed to address cost and quality and to cover all of so that the U.S. can take our place as health leaders – not as the country that spends twice as much, doesn't get any better health or quality and leaves 47 million without any coverage. There are several obvious first steps that the Federal government can take. Complexity and redundancy are costs in the system. Streamlining and creating a single system – that does not necessarily require a single payer- would help. The Federal government should examine its considerable purchasing power across Medicare, Medicaid, FEHBP, Champus and others toward standardizing reporting, payment policy, benefits, eligibility and quality metrics. If states are to play a role in health care reform, they need the capacity to work in a level playing field. ERISA prohibits much creative work and even the collection of key data from self insured businesses. In the end, then, the ultimate question remains – who pays? For those of us who believe we are already paying more than we need to through cost shifting of the uninsured and the inefficiency in our health care system, cost containment needs to be a part of any reform. But ultimately, the nation's uninsured, a growing number of under-insured and all of us who have coverage now and fear for its future, need a reliable and sustainable source of financing to affordable, quality care -that does not sacrifice the access expansions in place now- that only a strong and consistent national policy can assure.