Critical Condition

Explaining Obama’s New England Choice

Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy in New Hampshire, has a fabulous piece in the Union Leader explaining why President Obama went there to talk up his health plan rather than to neighboring Massachusetts or Maine:

None of the rhetoric in the President’s speech was new to New Englanders. All of it is eerily reminiscent of the hopes and dreams of Dirigo Choice in Maine and Commonwealth Care in Massachusetts. Both of those plans went into effect, and neither has proved effective, which makes it odd that Congress and the President wish to develop a plan by copying the broad outlines of the “Massachusetts model.”

Dirigo, which means “I lead,” is Maine’s state slogan. But the health care “reform” bearing its name led Maine into a mess:

Dirigo hoped to sign up 30,000 uninsured residents in year one and all 140,000 estimated uninsured residents by 2009. How did it do? In 2009, the Dirigo plan — which promised to lead the nation and serve as a model for all — covered about 3,500 previously uninsured people, or about 3 percent of its goal.

As for having no cost, the Dirigo plan has cost Maine taxpayers $150 million. Despite the taxpayer subsidy, premiums have been increasing and benefits dropping. Dirigo premiums climbed 74 percent during a period when state employee premium costs climbed only 17 percent. Skyrocketing costs have also required significant benefit reductions in the public plan. Hospital costs, for example, are now reimbursed at 70 percent, not 80 percent.

As for the later Massachusetts plan, based on the “Connector” model, it hasn’t fared too well either:

Rather than declining, insurance premiums in Massachusetts are rising much faster than the national average. The cost of family coverage is about 30 percent higher in Massachusetts than the national average. In addition, the waiting time to see a doctor has increased from 33 days to 52 days.

Commonwealth Care, the subsidized insurance part of reform, will cost almost $900 million, about 20 percent higher than projected. To make up for the shortfall, the state ordered subsidized insurers to cut payments to service providers and is considering capping insurance premiums, excluding some residents from eligibility, and limiting coverage to “services that produce the highest value when considering both clinical effectiveness and cost.” In other words, rationing.

Despite the costs and the subsidies, 3 to 6 percent of the population — depending on the measurement used — are still uninsured. Rather than creating an affordable option, state mandates made unaffordable premiums less affordable.

You can read more about Maine’s Dirigo disaster from the Maine Heritage Policy Center, and about the Massachusetts plan from the Cato Institute’s Michael Cannon.

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