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In Maine, good intentions paved the road to health-care Hell
A large part of the discussion on health care in Washington has revolved around the so-called public option – a government-run health insurance plan that would increase coverage and compete with private insurers to “keep them honest.”

President Obama has said he wants a public option. It is a key element in the health care reform plan presented recently by Sen. Chris Dodd, D-Conn.

But there's been surprisingly little discussion about the experiment that the State of Maine has conducted with a public option over the last five years. Before acting on health care reform, federal legislators would do well to look at a recently released paper by the Maine Heritage Policy Center. It describes what has happened in Maine – tskyrocketing premiums, decrease in quality of coverage, and failure to cut both costs and the number of uninsured.

In 2004, Maine's Dirigo Health reform plan began with $53 million and lots of good intentions. Among other reforms, leaders there hoped to cut the number of uninsured in the state by offering affordable, subsidized DirigoChoice insurance plans.

The theory was that this plan would insure so many more Mainers that it would end the phenomenon of “cost-shifting,” by which the cost of treating the uninsured is passed along to everyone else in the form of higher prices. Lawmakers were certain that Dirigo would create big savings for private insurers – so certain that they charged the private insurers an amount supposedly based on the expected savings to pay for Dirigo.

Over the next five years, Dirigo would collect premiums and dole out subsidies, for net revenues of $109 million. Taxpayers and insurers kicked in in $155 million more. As of May 2009, Maine had spent about $317 million on Dirigo, including the start-up money.

The result: About 3,400 previously uninsured Mainers are insured today with Dirigo. That's $93,000 for each newly insured person. The percentage of uninsured Mainers remains right where it was when Dirigo started: 10 percent. A large majority of those who switched to Dirigo – 64 percent – dropped their private insurance and switched to the subsidized “public option.”

Dirigo's enrollment numbers had never approached expectations, but they have plummeted recently because the program is no longer a good deal. The expected cost-reductions never materialized, so premiums had to be ratcheted up by 74 percent in five years....

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Maine Finds a Health Care Fix Elusive
...Maine’s history is a cautionary tale for national health reform. The state could never figure out how to slow the spiraling increase in medical costs, hobbling its efforts to offer more people insurance coverage. Many on Capitol Hill have criticized national reform legislation for similarly doing little to tame costs.

To Ms. Snowe, Maine’s past shows that change, while needed, should be incremental because mistakes are common. This is among the reasons she opposes an immediate public insurance option. “I mentioned to the president that people can’t digest everything at once,” she said in an interview.

To conservatives, Maine proves that government efforts to strictly regulate the nation’s health insurance market are doomed. Many of the reform proposals circulating on Capitol Hill have already been tried in Maine.

“These reforms are very well-intentioned, but in reality they have yet to produce the promised results or even be financially sustainable,” said Tarren R. Bragdon, chief executive of the Maine Heritage Policy Center, a conservative research organization in Portland....