Thursday, July 30, 2009

Learning from Maine's mistakes

David Freddoso examines how government-provided health insurance has worked out in Maine. The result has made it impossible for individuals whose employers don't provide health insurance or who are self-employed to buy their own health insurance.
For a good example of how the world can go wrong without a viable private individual market for health insurance, look to Maine. Esurance.com will not sell policies to anyone with a Maine zip code because individual insurers left the state years ago. They were mostly driven away by unreasonable state coverage mandates (marriage counseling must be covered by all policies, for example) and the requirement that every applicant be approved, no matter how sick they already are.

The only individual health insurer in Maine today is the one that runs Dirigo Choice, the state's unique "public option" plan. Dirigo's employer-based small business and self-employed plans closed enrollment in 2007 because the program has proven fiscally unsustainable. Its individual policy has become unaffordable -- premiums have nearly doubled to $1,489 per month for a family plan.

As a result, coverage is nearly impossible to obtain for those who are self-employed and have too much income for Medicaid -- in Maine, that's about $45,000 for a family of four (which partly explains why 23 percent of the state is on Medicaid). Only the employer-based group plans have survived, because they are covered under federal benefit laws that pre-empt Maine's laws.

Dirigo Choice executives compare their program to what Congress is attempting with its public option proposal. To be fair, the House and Senate versions of ObamaCare differ from Maine's approach in several ways. Yet both plans are similar in that no one can figure out yet how to make them fiscally sustainable. The great danger is that, with new coverage mandates and rules requiring approval of all applicants, the insurance exchange plans that President Obama envisions could begin to look like Maine, with reduced benefits and skyrocketing premiums. If that happens, the self-employed could be without any reasonable options.
I wonder how much attention the Maine senators, Olympia Snowe and Susan Collins, have paid to the failures of Maine's public option plan and whether they will learn from that when voting on whatever bill the Democrats come up with.