Maine legislators last week took up a plan by Gov. John Baldacci to roll out universal health insurance in his state as the hospital community there aggressively took issue with a key tenet of the proposal that would regulate hospital revenue and expenses.
Arguing that 180,000 Maine residents have no health coverage and that piecemeal reform is insufficient, Baldacci, a Democrat, wants to create "Dirigo Health Insurance," a sweeping program that would tack on an annual 4.1% surcharge on all private health insurance premiums. The state would use that money to subsidize insurance coverage for the uninsured and expand primary-care and prevention services.
Latin for "I lead," "Dirigo" is the Maine state motto. If the Dirigo program went into effect, the Baldacci administration could raise $80 million annually to expand coverage, according to the governor's office.
Dirigo would operate as a not-for-profit, public/private enterprise run by its own board and would use a variety of funding sources in addition to the surcharge to bring down premium costs and expand the availability of coverage.
"This is a plan that can cover every man, woman and child (in Maine) within four years," Baldacci said in a May 5 speech. Some 1.3 million people live in the state.
Last week, a joint committee of Maine's House and Senate convened to deliberate over Baldacci's 14-point healthcare reform bill. The committee could agree as early as this week on legislation to submit for the governor's signature, according to Baldacci's office.
Some insurers are concerned that Baldacci's plan would unfairly shift costs to them.
"If this is indeed a societal issue in Maine, we think a broader-based funding mechanism makes much more sense," said Rick Cockrum, vice president of government relations at Indianapolis-based Anthem Blue Cross and Blue Shield, which covers 557,000 beneficiaries in Maine.
Hospital officials, meanwhile, are more concerned about other controversial features of Baldacci's plan. Most alarming to the state's 43 hospitals is a proposal to implement a "global budget" that would set limits on how much hospitals can spend in a given year. Expense growth would be limited to 3.5% annually.
According to the Maine Hospital Association, taking that step would create a $750 million gap between spending limits and actual costs by 2005 because hospital costs are rising at a rate of 7% per year.
"I don't know where they're getting that number," said Trish Riley, director of Baldacci's office of health policy and finance, in reference to the $750 million. Riley said the global budget would be based on voluntary participation. Baldacci, she added, would create an antitrust exemption for hospitals that collaborate to stay within the state's guidelines.
Although the state would be authorized to regulate hospital expenditures if the volunteer system failed, "we don't want to do this from on high. We want to engage the hospitals," Riley said, "but they don't seem interested in cooperating."
Maine hospitals are indeed in fight mode. Baldacci's proposal "would be the first in the nation to regulate hospitals to this degree," said Mark Ishkanian, vice president of public affairs at the MHA. "We have mobilized our hospitals to speak out in opposition" to some parts of the plan.
For instance, the association also would like to see lawmakers scrap a provision that would ask hospitals to voluntarily limit their price increases to 3%, which would "result in job loss and service reduction throughout Maine," according to MHA's analysis. Under that scenario, hospitals would have to limit expense increases to less than 3%, and possibly be forced to curtail services, unless they found a source of revenue other than price increases.
Also causing consternation for the MHA is a separate provision that would freeze all new certificates of need for one year and allow state regulators later to set limits on all hospital construction and expansion projects.
The association supports some of Baldacci's proposal, including broad reform of the certificate-of-need process and public disclosure of healthcare pricing information.