The Dirigo plan could potentially drive costs even higher, making a bad situation worse.

Gov. Baldacci deserves ample praise for the wide-ranging health care reform proposal he announced last week. Fulfilling a campaign pledge, the governor presented a plan that addresses the most serious issues affecting the delivery of health care today – affordability, quality and access – and contains provisions that, if passed by the Legislature, will be a huge step toward meaningful, needed reform of our complex health care system.

After years of debate and delay, who doesn’t agree that it’s time to do something about health care? The challenge, though, is to make sure that we do something right, something that works and something that doesn’t make our health care situation worse. That’s why the Legislature should not be expected to act on the plan in just the few weeks left in its current session. More time to carefully examine and consider this sweeping proposal is needed.

I would like to say that Gov. Baldacci hit the proverbial home run with his health care plan. But he hasn’t. It’s more like a sacrifice fly: some of the provisions will certainly advance health care reform and bring real benefits closer to home. But not without serious costs.

Some of the best parts of the plan – expanding access, better health planning, strengthening the certificate of need process, giving patients more information and simplifying administrative procedures – are long overdue and are attracting broad support from diverse groups that haven’t always been on the same side of these issues. If just these portions of the plan are passed by the Legislature, Gov. Baldacci will rightfully claim a huge success in addressing the health care needs of thousands of Maine people.

But other parts of the plan raise serious concerns. It is our conclusion, based on the very limited data that has been provided, that the governor’s health care reform plan simply will not achieve the fundamental goal of providing health care coverage to uninsured Maine people. As currently structured, it cannot and will not work.

Here’s why:

The governor’s plan calls for a new 4.1 percent tax on insurance premiums and, unlike any other tax, gives them no way to recoup their costs. The tax is expected to raise up to $160 million to pay for a new government entity called Dirigo Health. Dirigo Heath will use the money generated by this tax to help provide health care plans to small businesses and individuals who don’t get coverage through their employers. Small businesses would voluntarily opt to obtain a health plan through Dirigo Health. But to use Dirigo Health to obtain a health plan for their employees, a small business would have to agree to a number of costly provisions, which include offering a very generous benefits plan and paying 60 percent of the insurance premiums not only for all their workers, but for their dependents as well, along with part-time and possibly seasonal employees.

As a result, the average employer will see dramatically higher costs to provide health care coverage to their employees; in some cases it will double.

To take one example: a small business with about 25 employees in South Portland recently compared its current health care costs with what it would pay under the governor’s plan. Total costs went from $96,500 a year to $148,000 a year. Even the portion of the premium paid by workers increased, from $48,000 a year to nearly $60,000 a year, according to the current Greater Portland Chamber of Commerce Employer Survey.

With these kinds of increases, it is doubtful that many small businesses will enroll in Dirigo Health, meaning that few currently uninsured workers would actually obtain coverage. Since this is the exclusive means by which the plan obtains increased and even universal coverage, it appears to be fatally flawed.

There are other problems too: a “voluntary” global hospital budget that appears to reduce hospital spending by $750 million a year, forcing major layoffs and cutbacks in care; a provision to place unprecedented authority over the health care system one-sixth of the entire Maine economy into the hands of a single person in the executive branch; a premium rate regulation process that, based on similar experience in other states, could actually lead to higher premiums.

This doesn’t mean that the plan cannot be fixed. Instead of a 4.1 percent tax on insurance premiums, for example, how about a small, broader based tax on alcohol, tobacco and snack foods as a more fair, reasonable and sustainable way to fund expanding access to health insurance?

In the current hurried climate, it is doubtful these alternatives will be given adequate consideration. That’s why the Legislature needs more time. This may be our only chance to achieve true health care reform. If we aim and miss, and the governor’s plan does not succeed, will we get another chance?

In his inaugural address, Gov. Baldacci said, “How many workers won’t get a raise this year because their employer has to pay more for health insurance? How many jobs could be added to our economy if the cost of health care wasn’t so high?”

A plan that potentially drives these costs even higher solves nothing and only makes the situation worse for our families and for the economy. We are very close to solving our health care crisis. Let’s take the time to do it right.

Katherine D. Pelletreau is executive director of the Maine Association of Health Plans in Cumberland.

Copy the Story Link