Grant Description: What are the program accomplishments and vulnerabilities of DirigoChoice, a subsidized health insurance program which is the centerpiece of Maine’s health care reform legislation, Dirigo Health. While it was too early in the program’s implementation to measure Dirigo’s ultimate impact on coverage, cost, and quality, the researchers evaluated program accomplishments and vulnerabilities. Specifically, the following questions were addressed: 1) Are low wage workers and their families more likely to take up health insurance coverage, and does this affect their ability to get care when needed? 2) Are small employers more aware of and likely to offer health insurance to their employees? What factors of the program are more successful at enrolling small businesses and how satisfied are employers with the program? 3) How is the DirigoChoice “savings offset payment” calculated, and is this revenue stream sustainable? 4) Is this approach to insurance coverage expansions replicable in other states? The objective of this project was to assess the progress of Maine’s approach to coverage expansion and to determine if DirigoChoice is sustainable and replicable.
Policy Summary: In 2003, Maine adopted the Dirigo Health Reform Act, which aimed to make affordable health care coverage available to every Maine citizen by 2009, slow the growth of health care costs, and improve the quality of care. This study examined interim indicators of Maine’s progress in providing affordable health insurance coverage after two years of program implementation, midway between the legislation’s adoption and its 2009 goal. The evaluation focused on the state’s progress in implementing Dirigo Health’s two major coverage initiatives: 1) DirigoChoice, a subsidized health insurance program, initiated in January 2005, for eligible small businesses, self-employed workers, and individuals; and 2) an increase in the annual income eligibility level (from 150 percent to 200 percent FPL) in the state’s Medicaid program (called MaineCare) for parents of dependent children under age 19. Since enacting comprehensive health care reform in 2003, Maine’s Dirigo Health program has helped expand coverage for low- and moderate-income individuals. By September 2006, about 11,100 individuals were enrolled in DirigoChoice and another 5,000 in MaineCare’s eligibility expansion for low-income parents of dependent children. While these reform programs are making health coverage more affordable to low-income individuals, small firms, and sole proprietors, with subsidies targeting those most in need, by late 2006, the initiatives had enrolled less than 10 percent of previously uninsured residents. To pay for this expanded coverage, Maine has utilized a “savings offset payment (SOP)”, an approach that captures savings to the overall health care system from lower uncompensated care costs and other cost saving measures, through assessments on insurance claims. However, the funds raised thus far have been insufficient to pay for greater subsidized enrollment in Dirigo programs, leading to a search for other financing sources to sustain the program. The researchers observed a pattern contributing to higher than expected costs for the state’s implementation of the program: more people with very low income enrolled in a fully subsidized health plan (Medicaid) than in one requiring enrollee contributions (DirigoChoice), even when premiums and deductibles are heavily subsidized. In addition, more people with income below 150 percent of the federal poverty level enrolled in DirigoChoice than projected, requiring greater subsidies from the state. The state has found that raising funds to finance such subsidies is politically difficult, regardless of the source. With regard to the state’s effort to encourage small employers to offer health coverage, the researchers found that the 700 small firms which enrolled in DirigoChoice as of September 2006 composed only 2.5 percent of eligible businesses. Among unenrolled employers surveyed, very small firms tended to find the product unaffordable. Accordingly, states that want to increase, rather than simply maintain, employer offer rates must consider stronger incentives to persuade employers to offer and contribute to employee health insurance costs. In states with high health care costs, employer mandates may pose an unaffordable burden on small firms unless overall system costs can be brought under control. Maine’s experience implementing the Dirigo Health program provides important lessons for other states working to expand insurance coverage.