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Alex Hammer

Dirigo – The Missing Piece
By Alex Hammer
Mar 18, 2006 - 8:17:00 AM

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Most individuals are likely keenly aware that the issue of healthcare in Maine, including the Dirigo initiative, has come center stage, continuing into this election cycle.

The Kennebec Journal on March 14 summarized the divisions regarding Dirigo as follows “Health insurers say Dirigo unfairly forces them to pay for savings that are mostly imaginary. Republicans say the initiative is too expensive and unsustainable. Democrats defend it, saying Dirigo is the only plan on the table to address a growing health-care crisis.” The paper concluded in part, “All three groups may be right and yet they are all still missing the point. Maine's health-care system was too expensive before Dirigo. It remains too expensive. Arguing Dirigo to death will not solve the problem. Addressing the program's weaknesses might.”

The same article indicates that “Maine's health insurance costs are some of the highest in the nation. We spend more of our income on health care than 45 other states” and “roughly 130,000 Mainers are uninsured…about 9,000 Mainers are insured under the program; only about 2,000 of that number were uninsured before they joined Dirigo.” The Administration now reports currently that 15,000 “have had coverage” in Dirigo.

The most recent issues regarding Dirigo focuses on the funding source for the program and also who will administer and manage Dirigo. The Governor has recently proposed a major structural change to Dirigo such that an outside provider, currently Anthem, will no longer be administering the program and Dirigo will instead be self-administered. Dirigo is funded by a highly contentious (to say the least) savings offset payment (SOP) funding mechanism in which supposedly realized savings from the program are recouped from health insurance companies to continue operations. I say supposedly because there has been major news coverage attesting to the fact that the determination of the SOP has seen huge disagreement. The Administration stated that Dirigo saved a reported $137 million and a $43.7 million savings figure was set as a determination by the insurance commissioner (during the process a greater than $6 million overestimated figure was admitted and concerns were raised in regard to the accuracy of figures and the broadness from which it was derived). Much of this $43.7 million total has been reported to have come, actually, as a result of a voluntary cap on hospital costs (which has been argued is not part of the actual Dirigo program) and less than $3 million of the $43.7 million total has been reported attributable to reductions in uncompensated care.

Additionally, this SOP determination is now facing legal challenges with the litigants claiming that the SOP is flawed and that they haven’t seen the savings indicated (they also object to the legislature imposing a tax but the Administration has indicated that the SOP is not a tax). Insurance companies want to pass on this assessed cost to consumers in the form of higher premiums, which, in order to reach the original Dirigo agreement was apparently made permissible. Governor Baldacci supports legislation to prevent them from doing this and is very strident in his language against them. Opponents to the SOP believe strongly that it is another tax.

Republican candidate for Governor Peter Mills indicates of Dirigo that “The product has become notorious because so many other Maine premium payers (650,000 of them) are now being taxed to benefit so few.” The Maine Heritage Policy Center puts the number of SOP premium payers at up to 759,000, with 260,000 of those below 300% of the poverty line. Perhaps worst of all, as health care costs continue to climb more small business will elect not to provide coverage, adding to those uninsured. This is to be expected from the information above. Additionally, it has been pointed out that as certain large insurers, including those that have out of state plans are exempted from the SOP, this may encourage other large companies to leave Maine in their health coverage selection.

On the official government of Maine website, at www.maine.gov/governor/baldacci/healthpolicy/ under the heading of “What is the Dirigo Health Reform Act?” it states “Controlling costs, improving quality, and ensuring access - the Dirigo Health Reform Act is a comprehensive solution to address rising health care costs, improve quality of care, and ensure access to coverage for Maine’s uninsured. This public-private partnership will create an affordable health plan, create a state health plan, invest in public health and disease prevention to assure every man, woman and child in Maine has affordable quality care through a reliable and accessible health care system. The Governor's Office of Health Policy and Finance is responsible for overseeing the implementation of Dirigo Health Reform.”

The official website for Dirigo is www.dirigohealth.maine.gov. While there you can read the Governor’s March 15, 2006 press release entitled “Governor Outlines Proposal to Expand Dirigo Health”, at www.maine.gov/governor/baldacci/healthpolicy/news/3_15_06.htm

Governor Baldacci has been quick to label opposition to Dirigo as political rhetoric. While some may use Dirigo for political advantage it is quite apparent that the program has insured far less than envisioned and at significant cost (I almost said exorbitant cost and in all reality that is likely a more appropriate term). Importantly, only a small percentage of those signing up for Dirigo are previously uninsured, the remaining merely switching from other insurance.

Despite its poor start and current condition, I am of the camp that would like to improve rather than scrap Dirigo. There are at least three major reasons why I feel this way. One, I do believe that a significant percentage of Maine citizens support the underlying objectives of Dirigo, which is to reduce the number of Mainers without healthcare insurance and wring cost savings out of the system. I think that this is reflected in the fact that Dirigo initially received largely bipartisan approval to come into existence (it passed by a reported 105-38 margin in the House and 25-8 in the Senate). Concern about Dirigo in its current and proposed directions need not reflect an abandonment of the desired objectives from which the program emanated, but instead may serve as apt recognition of the significant difficulties that Dirigo is having in regard to reaching those objectives.

Concern over Dirigo is intensifying for those who disagree, as do I, with the Governor’s proposal to end private operation of Dirigo in order for the state to self-insure the program itself. The cursory (at best) and hastily called March 2 meeting (coinciding on the day that Peter Mills would have proposed his Dirigo fix in the legislature) soliciting proposals within 10 days to improve Dirigo was perhaps a sham because (and this is nothing new opponents to the Governor will tell you whether it be in healthcare or across the board) those suggestions were not used and instead just days following the deliverance of the alternatives which Democrats had requested the Governor instead put forth his structural change that widens the rift with his opponents.

And he accuses the Republicans of playing politics with Dirigo?

Also, I believe that the Governor is apparently “doubling down” (or using offense as his defense) by expanding Dirigo before it has been demonstrated that the inefficiencies of the current system have been fixed (and when you increase the size of an inefficient system those inefficiencies, all things being equal, also expand). Before the Governor’s proposal to exit from the one private player in the Dirigo system, Anthem, many had been calling for just the opposite, route, to increase the level of carriers and competition that offer Dirigo.

I like the fact that the Governor is a “big thinker” when it comes to an objective like Dirigo, and I commend all Mainers that support Dirigo for having similarly lofty goals. But I think that the way to reach those goals must be contained within collaboration and really should not be viewed - whether or that is indeed the reality - as being uncompromising or (in the extreme) heavy handed. I don’t believe that that gets us to where we want to go.

One doesn’t need to be an economics major to realize that in a capitalistic society (such as our own) that competition and market forces provide healthier products and better business results than both bureaucratic management and single-entity control. While Governor Baldacci has assailed the profit motive (and it can be noted Anthem indicates also that they were receiving meager profit anyway), profit and economic survival drive business success, not governmental bureaucracy. Picture a bureaucrat, whose job is secure, and their relative motivation to provide efficiencies in healthcare versus a private company in which the livelihood and success and future of the business – and one’s job! - depends upon its success in selling and managing productively its products. I believe strongly in a government oversight role, even enhanced in areas of critical citizen need or safety to regulate and insure protections, but thinking that the government – bureaucrats – can wring efficiencies and cost savings out of business that the private sector cannot is to me – well, highly misguided and actually stupid.

A March 16 article in the Bangor Daily News states in part “On Wednesday, Trish Riley, head of the Governor's Office of Health Policy and Finance, said the governor's plan would eliminate the profit motive that has contributed to higher costs under Anthem's administration. ‘Anthem is required to spend about 75 percent of premiums on paying medical claims,’ she said. ‘The other 25 percent goes to marketing, administration and profit. That will now be money that [the Dirigo agency] will be able to use to make coverage available to more people.’” A major problem with this argument, however, it seems to me, is that whoever runs the program is going to have administration and marketing costs, so that rings really hollow and untrue. And we’ve already discussed the profit situation and motive.

While I mentioned about an aim of Dirigo to reduce the rolls of the uninsured being a general goal that many may share on both sides of the aisle, whether Mainers collectively want to go the further leap of an envisioned universal health care system does, I believe, break down more along political and in fact philosophical beliefs in regard to what you feel the proper role of government is, and is not.

I believe in sustainable practices and that we should be as fully generous as sustainable processes allow but not beyond these. I believe that it is compassionate and good to give what one has but not to give what one does not have. My strong focus in economic development in this campaign has been on the development of the most sophisticated and insightful economic development strategies amongst all of my competitors towards growing the total pie in Maine through better meeting the needs of a hyper-competitive and information-rich global economy of the 21st century that the world has become. This is opposed to a focus on competing over a smaller pie, in which an I win and you lose mentality pushes us ever further behind other states no matter who wins or loses.

Please remember this: Those whose primary emphasis is on either increased healthcare spending or increased tax breaks are fundamentally focused on carving out, in a manner in which they believe in, a larger share of that smaller pie. While we need to also do things that make sense immediately, I am of the belief and focus that only longer term efforts, strategies and focuses will fundamentally get us out of the economic quagmire in which we find ourselves that result in difficulties in healthcare and other areas.

I believe that we have largely been running around in circles, making relative more or less progress based upon how the rest of the country is doing in good times and bad, but not fundamentally addressing the long term issues such as successfully competing in a global economy that would once and for all free us – at least to the extent that they have freed others doing better outside of Maine - from these constraints.

This is a critical point to remember also: There are no INHERENT difficulties that present us form doing as well as other states. We are intelligent, we are hard working, we have more than our fair share of natural resources. Yes we are a small state but the much more determining factor is that we have not had the vision to position ourselves effectively enough in the world as it has evolved.

I am not implying that all that work is on the macro level. We should continue to work in a very aggressive manner to bring clearly identified cost efficiencies to the healthcare system (and in other systems) and work to structure our healthcare system, as I will elaborate further, so that we get the greatest bang for our buck. We should do this aggressively but within the context of that larger economic and global picture.

The second reason that I would like to improve rather than scrap Dirigo is that I agree with the argument that the program is still relatively new. I don’t agree that Dirigo is the model for the nation (that’s more extreme than even spin) and I do feel that the program is experiencing significant difficulties as discussed, but I believe that there are elements of the program that are strong in terms of focus on better quality of care and extracting cost savings.

The third reason that I would like to improve rather than scrap Dirigo is that the ideals of Dirigo, only recently enacted, have not had the opportunity to work in a strong bi-partisan collective effort focused on fixing the problems encountered by Dirigo and making it better.

I believe that we need to sit down together in a bi-partisan way and almost start at the beginning defining each key term and process in regard to how Dirigo is proposed to work, and – very importantly – measured. They say that when a task seems insurmountable, such as fixing Dirigo may seem to be (and the same principle can be applied to the much much larger monster, DHHS) you have to break things down into smaller units that are more manageable. It’s like the principle of when life seems stressful just take it one day or one task at a time. But smaller is not enough. There has to be shared understanding. When each piece is built upon earlier pieces that are well understood and in agreement in a bi-partisan fashion, then you’re starting to set a framework by which a system can be built and evolve that is well understood and, critically importantly, enjoys broad support.

A recognition that until we COLLECTIVELY get our arms around Dirigo and healthcare generally we’ll just be bickering back and forth and at cross purposes and not using our energies together to make the system better is the beginning of this more productive process occurring.

So, what does Dirigo need? It needs a stable funding source. It needs involvement with the private sector and in a way that is broadened rather than scrapped. Importantly, it needs greater bi-partisan work to sit down and identify and then fix where Dirigo is coming up short relative to its intended purposes and ideals. This should I believe involve an almost from scratch one at a time examination of all components, processes and even terms in Dirigo to develop a consensus in regard to the structure of the system that is being built and how it will operate and continue to be assessed and amended that all or most are strongly in agreement with.

Why has not this meeting of the minds of those involved with Dirigo occurred? While no one party can ever be fully at fault, as a signature effort of his administration I believe, and this is what I hear also from many others, that the Governor has not been willing to truly or meaningfully compromise on Dirigo. It may sound simplistic but I believe that this is the major reason that it has remain stuck or underperforming at this time.

And there is – as the title to this article states – a critically important missing piece. Whether you believe that either government or the corporation should fundamentally control Dirigo, any healthcare system will to my mind never be close to being optimally efficient until you incorporate greater involvement and control by the healthcare consumer him or herself towards targeted ends and program goals. I’ll explain what I mean and why it is important.

As a pure consumer of healthcare, it may not matter much to me who is managing the program. I am concerned with my own health and whatever I perceive to be involved with that. When I make responsible healthcare decisions and am motivated to maximize my good health and do what I can do to insure that, I do so much more through my actions rooted even in self-interest to improve the profitability of the healthcare system beyond the looking at structural elements and who, for example, might be the better of two program operators.

I see bi-partisan consensus on Dirigo (and all healthcare structures) as step 1. That’s what Maine is focused on now if a bridge around common principles (such as at the creation of Dirigo) but its not the end even if we get it right. Step 2, related to Step 1, is how the programs are structured to build and encourage greater consumer accountability, empowerment and responsibility for their own health. Step 3 is when you make the healthcare development and maintenance process going forward more transparent and attractive to consumers such that we’re working on this much more together (citizens and government) and feel interested, motivated and responsible for its results.

I’m not talking about, which can be one element but has been highlighted elsewhere in regard to a stronger focus on enacting requirements on access to joining the system (Also, I have been fortunate after my major accident to receive needed benefits, so I don’t want to sound like a hypocrite). I’m talking about beginning with an educational component in which we understand as health care consumers to a greater degree how the decisions that we make both impact the system and our own health.

But it is more than education. It’s a sense of connection and collaboration – an understanding, trust and invested stake – that we as citizens do or do not have, or have in lesser or greater degree, with our societal systems, whether they be healthcare, education, or in other areas.

This may sound ethereal and difficult to tangibly hold onto, but we’re not feeling connected to our government and our systems including healthcare organizations in a way that is more meaningful in our lives. How many would visit a hospital or clinic for educational purposes before they are sick? How many have taken an active role in the actual healthcare policy decisions and discussion of this state? Rather than being engaged, proactive and inclusive, I instead believe that healthcare is in a highly reactive state in our society (generally speaking, not just Maine) which is a shame when you consider the “health is wealth” point of view. "Tough Choices", listening tours, is an attempt by the Governor to engage people in healthcare, but we need to have this become essentially systemic and integrated into our lives rather than event or special event based.

I realize also that incentives are already in place to incentivize healthy behaviors, and to me that is progressive as well. But what I am talking about above as a missing piece is broader and reflects, involved with this but also beyond it, how we interact with our healthcare system and with our government as a whole.

A few more proposed specifics on Dirigo. I am in agreement with Republican candidate for Governor Peter Mills’ call to use Dirigo only for the uninsured. He writes “Stop using taxpayer money to steal market share from competing commercial products. Focus instead on Maine's 130,000 uninsured who are most greatly in need.” Though I remain open to compromise and all reasonable proposals, I also to this point have not been convinced due to the dangers of cherry picking in regard to notions of high risk pools and abolishment of community rating. I’m also concerned about the potential for cost-shifting as the most sick individuals may be forced increasingly out of the private healthcare market and onto government programs. In regard to health care savings accounts, I am not super knowledgeable about these (so maybe I am missing something) but with American’s savings record overall (even our federal government, do you see how they keep raising the debt limit?) I am dubious about their use especially if they serve as any kind of replacement to a current benefit. Yeah, I hear they’re much cheaper for the state. But why?

It is often reported that Dirigo means “I lead”. But is it leading? Not currently. We should take perhaps greater care in identifying our state motto with anything less than our collective best.

I propose that we work together to make a system illustrative of all of Maine’s contributions and results -- and worthy of that rich name.

Alex Hammer is an Independent candidate for Governor residing in Bangor. The campaign’s website is www.Hammer2006.com.


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