Governor Baldacci Unveils Health Care Reform Plan for Maine

Governor's Speech and Summary of Plan:

Governor John Elias Baldacci Dirigo Health - Health Reform for Maine May 5, 2003

Fifteen months ago, I stood at this podium and delivered the first policy address of my campaign for Governor. At that time, I promised to make affordable, quality health care available to every Maine citizen.

Fifteen months ago, 160,000 Maine people lacked health insurance. Today, 180,000 of our citizens have no health care coverage. In the last decade, Maine's health care costs have grown more than any other state in the country. And, for small businesses in Maine, health insurance premiums have been rising at an average clip of 58%.

Fifteen months ago, I knew we had a health care problem in Maine. Today, I'm certain we have a health care crisis.

The lack of affordable, accessible, quality health care in Maine is not just a crisis for the well-being of our citizens. It's an urgent problem for the economic development of our state. Together, we've already tackled hindrances to Maine's economic prosperity. We've passed a state budget that addresses shortfalls without raising taxes. We've established a community college system for Maine. We're putting an economic development bond package before the voters in June.

But we also need a healthy workforce, lower health care costs, and predictable insurance rates to grow the Maine economy. A recent study shows that small businesses report for the first time that rising health care costs are a greater concern to them than taxes. Businesses, government, nurses, doctors, hospitals, and health care consumers all know that we must solve the health care problem if our state and our people are to prosper. And we must solve this crisis because it's the right thing to do!

Creating this plan hasn't been a simple process. It's taken hard work, and collaboration. Four months ago, in my first Executive Order, I established the Governor's Office of Health Care Policy and Finance, directed by Trish Riley. Trish gathered 27 representatives from business, providers, consumers, and government into a Health Action Team to consult on our health care plan. Over 50 people gave over 100 hours in subcommittees to work on plan development. The input of all these people over the last three months was invaluable to forming our final product. I thank you for your guidance and input.

Today, I'm proud to offer a plan that will: · provide affordable access to health insurance; · bring spiraling costs under control; and · assure that the health care delivered in Maine is of the highest quality.

Today we have to set aside special interests and put the people of Maine first. And the voices of those people tell us why the status quo is unacceptable. We must act now.

I know of a long-time married couple from Herman who are exploring divorce so that the wife can qualify for Medicaid to get the health care she needs for her rheumatoid arthritis.

A woman from Deer Isle wrote that her husband claims that "cancer was a piece of cake compared to dealing with the insurance and health companies."

The owner of a car repair shop on Mount Desert wrote that the cost of health insurance for his four employees has doubled in the last two years, so that he now pays over $47,000 a year He's had to make pay cuts and raise prices to cover insurance costs.

An architecture firm in Brunswick has had to change its health care coverage to a catastrophic plan with a $5000 deductible per person. The president of a Newport company that is the largest manufacturer of drumsticks and mallets in the world is worried about choosing between staying in business in Maine and having health care coverage for his 100 employees.

And a man from Swanville wrote about suffering a terrible accident and being unable to pay his $15,000 hospital bill. Seriously injured people who are uninsured, he said, can't work, can't pay their bills, and "are haunted not just by death, but by debt."

For these people and the thousands who suffer in silence, health reform isn't a priority - it's a necessity. In the past we've tried to repair our health care system one piece at a time, and that approach hasn't worked. Cost, quality and access must be addressed together.

The problems we face are complex. Expanding access alone increases costs; cutting costs alone means some people don't get care. These problems won't be resolved overnight or with simple solutions. Fortunately, Mainers understand that we can't sit back and wait for our ship to come in. We must build the ship ourselves. And we will.

Our plan recognizes that real, sustainable reform can't be accomplished piecemeal. It is a bold and comprehensive approach to health system reform. This plan lays out the building blocks to construct the health care system our people deserve. But its government, business, hospitals, health care providers, insurers, and all Maine citizens working together that will make change happen. And each of us has a personal responsibility to be as healthy as we can be. We can't neglect our health, show up in the ER for care and act as if we had nothing to do with the experience!

Some will say we are moving too fast. Tell that to laid off workers who lack coverage. Tell it to families constantly on the verge of losing their insurance. Tell it to small business owners whose health premiums are escalating beyond their reach. And tell it to those who operate bigger businesses and are forced to deal with the added costs that are shifted in their direction when the uninsured can't pay their bills.

We've had study after study. The Legislature has considered many excellent proposals. Organizations from the Portland Chamber of Commerce to Consumers for Affordable Health Care to the Maine Hospital Association have all released their own plans for reform. Those efforts laid the foundation for the proposal I'm presenting today.

Each year in Maine, we spend over $5 billion on health care. But we don't do it in an efficient way. We work in silos. Physicians here, hospitals there, big business, the self-employed, insurance companies - often working at cross purposes. In this big and complex system, even with all this spending, one in six of us lacks health insurance!

Today, people without health coverage show up in doctors' offices and in emergency rooms, often at the last stages of serious illnesses that could have been prevented or treated for less. To cover the cost of care for the uninsured who can't pay, hospitals and physicians raise their rates, and all of us who pay health care premiums pay more.

Each year, we spend more than $275 million on bad debt and charity care in this state. That's inefficient and unfair.
Today, we are creating Dirigo Health Insurance. Our plan will charge an annual assessment of 4.1% on all health insurance premium revenues to recoup a portion of that bad debt and charity care. This is money already in the system. We'll redirect that bad debt spending from the back end of the system to the front end, investing in insurance coverage, primary care and prevention. Those funds will help Mainers who now can't afford health care premiums to purchase health insurance.

Our plan will cover families of 4 with incomes at or below $55,200; families of three who make $45,780 or individuals earning $26, 940 or less are eligible and will pay premiums on a sliding scale based on their income.

Our plan pools those dollars from bad debt and charity care with contributions from employers, employees, individuals, and Federal funds to more efficiently and effectively provide coverage for the uninsured.

To provide this coverage, we'll create the Dirigo Health Plan - a comprehensive health plan available to individuals, the self-employed, and businesses, both small and large. Health insurance companies can continue to market a variety of products. But Dirigo Health will be a plan with a difference.

First, Dirigo Health will help families and individuals pay premiums. Second, it will be a public-private partnership. Dirigo Health will be run by its own Board of Directors. It will be non-profit. It will pool funding, draw Federal funds available to Maine, arrange payments to help make premiums affordable, contract with private insurers and pay insurance on behalf of individuals, businesses, and the self-employed who enroll.

It will set the rules, establish a comprehensive benefit, and limit the administrative charges of insurance companies. It will guarantee a fair market rate for the services delivered. Dirigo Health provides you choice of physicians and access to affordable, quality care. And this is a plan that can cover every man, woman and child within four years.

Also, to make insurance affordable over the long term requires serious attention to the cost drivers of health care. We're calling for providers and insurers to limit price increases to no more than 3% through 2004. We'll track and report on their progress. If voluntary measures don't work, action will be taken to keep health care costs from growing too fast. We'll strengthen our oversight of insurance premium increases and require approval of any future rate hikes in the small group market as we do now in the individual market. We'll help big businesses, too, in their negotiations with insurers to keep costs from shifting to them.

Most important, we need to invest more wisely and build the best health care system for the future. More health care is not necessarily better health care.

Maine is not a wealthy state, yet we rank 11th in the nation in health care spending. We have more inpatient hospital use than any other state in New England. We know that health care supply drives demand. In health care it's true - if you build it they will come. We can do better.

We want the best, not the most health care. Today I'm issuing an emergency rule to place a moratorium on the Certificate of Need Program. With the exception of emergencies and projects already proposed, we will authorize no new spending on new buildings and new equipment for one year.

During that year we'll work together to develop a state health plan, to strengthen our Certificate of Need process and to put it on a budget. We'll build only what we really need and make those services and facilities affordable. In the spirit of collaboration, we are today asking Maine's hospitals and physicians to come together to work with us to develop a creative plan for the future of Maine's hospitals.

In most of Maine, health care is a monopoly with little competition. But I don't think health care should be marketed like used cars. Every Maine citizen, no matter where you live, needs to know you'll have quality care when and where you need it.

All of us need access to nearby emergency care and primary care. Yet, many of our rural hospitals are at risk of closing. All of us need the best specialty care here in Maine, but it doesn't all need to be at every hospital. In fact, we know high volume means higher quality of care, so we need to build and support both rural access and specialty centers.

I will protect hospitals and physicians from any antitrust concerns and ask them to work with us to develop a road map for hospital services throughout Maine.

Access for everyone to a more affordable system is only a victory if the quality provided is the best it can be. Medicine is a rapidly changing field. I know Maine's excellent physicians, nurses, and other providers do all they can to keep up to date. But there's so much new knowledge today that it takes 20 years for best practices to become common practices. That's not right. We'll create an independent Maine Quality Forum to help Maine's providers learn new information quickly and easily.

We'll also measure and report on health care performance statewide. Today we can learn more about how to buy a good quality toaster than we can about purchasing quality health care. The Maine Quality Forum will provide consumer education, promote wellness, and be a true resource for Maine's providers and consumers alike.

Health care, in the final analysis, is a personal responsibility as well. Three of four leading diseases that Mainers suffer and die from are largely preventable. We are part of the health care cost problem and we all need to do a better job to improve our health status. Today, I want to reinforce our commitment to helping Maine people be as healthy as we can be.

As part of my health care package, I will ask for a constitutional amendment to protect the Fund for Healthy Maine.

Investing in keeping Maine people healthy will be an important legacy of health reform. Maine will lead the nation and send the message that primary care and prevention do not take a back seat here. Forevermore, the dollars available from the tobacco settlement will all be used for health care access, public health, and prevention of disease.

My health plan is called Dirigo Health after our state's motto - to lead. I want Maine to lead in acknowledging that all of us have a role to play in solving the health care crisis. I want to redirect dollars from bad debt to cover the uninsured. I want to take the $5 billion dollars we spend each year on health care and spend it in a planned and thoughtful way. I want Maine to lead in our commitment to assure each and every one of our citizens access to affordable, quality health care.

Our plan is available today for the people of Maine to review. This week we will present legislation to make this plan a reality. I ask you all for your support and help. Working together, I know we can meet the goals of an affordable, quality health care system for our people and our economy. Let's do this for Maine!

Dirigo Health - Health Reform for Maine

"Our goal is quality care for everyone at a price we can afford." -Governor John E. Baldacci

Summary

Strategies to Address Health Care Access

1. Create Dirigo Health Dirigo Health will offer, through private insurance carriers, Dirigo Health Insurance (DHI), comprehensive, affordable health coverage to workers in small businesses who work 15 hours a week or more, self-employed persons, individuals without access to employer coverage, and their dependents. Employers participating in Dirigo Health would benefit from lower rates due to pooling of employer, employee, state and federal funding sources. To participate, employers must pay at least 60% of combined individuals/dependent premium costs. Dirigo Health will ensure that private plans delivering DHI meet high standards for quality and limit expenditures on administrative costs.

2. Provide Subsidies to Eligible Maine Residents MaineCare will be extended to parents with income up to 200% of poverty and childless adults with income up to 125% of poverty; this expansion does not require any federal waivers. MaineCare enrollees whose employers participate in Dirigo Health will have the option of getting coverage through their employer's plan with a MaineCare wrap-around or enrolling directly in MaineCare. Workers ineligible for MaineCare will receive assistance in purchasing DHI coverage on a sliding scale based on ability to pay if their income is below 300% of the Federal Poverty Level ($26,940 a year for an individual, $45,780 for a family of 3). Similar workers in large, fully insured businesses will be eligible to have a portion of their premium subsidized. Uninsured residents with incomes over 300% of poverty may purchase at cost the coverage available through Dirigo Health.

3. Pool Resources to Finance Dirigo Health Assistance for Maine residents up to 300% of poverty will be financed by pooling individuals and small businesses, by pooling contributions from employers, individuals, state and Federal funds and by recovering and redirecting 60% of the funds currently spent on bad debt and charity care. By pooling these resources, access can be achieved without new state appropriations.

Strategies to Address Health Care Costs

4. Develop State Health Plan to Connect Resource Allocations with Public Health Goals This plan will set explicit, measurable goals to address quality, cost and access to health care and will establish a budget to assist in resource allocation. A CON Capital Investment Fund will guide expenditures on new capital investment. The Governor's Office of Health Policy and Finance will be responsible for creating the plan with guidance from an 11 member Council on State Health System Development.

5. Strengthen Certificate of Need to Better Control Costs A moratorium will be placed on CON for one year, while the State Health Plan and Capitol Investment Fund is developed. Exceptions can be made for emergency needs. The CON program will be revised to cover functions and expenditures regardless of site of care; respond to clear goals and criteria established in the Plan and will operate on a budget allocated during 2 competitive review cycles. Ad hoc expert panels and formal review by the Bureau of Insurance and Bureau of Health to assess implications on insurance costs and health goals will be provided.

6. Plan for Hospitals for Maine's Future - Voluntary Hospital - Physician Cooperation The State will work with the Maine Hospital Association, the Maine Medical Association and the Maine Osteopathic Association from June 1, 2003 - March 2004 to develop a plan to address primary and acute care needs in Maine. Plans will be developed to assure the best constellation of hospital and related services for the future, to strengthen rural health and identify specialty centers for primary care and prevention, as well as specialty acute care services. This plan will be driven by a hospital services budget to reallocate resources to better serve Maine. Statutory language will be enacted to allow cooperative planning without violation of anti-trust laws. The work will inform the State Health Plan and CON Capital Investment Fund.

7. Disclose Health Care Pricing to the Public To provide greater transparency and accountability on the part of providers and insurers and to better inform consumer choices, we will require disclosure of average charges and payments accepted for certain commonly performed services at hospitals, physician's offices and other providers such as health centers. This information will be required to be posted and available at each provider site will be published on the Maine Quality Forum website.

8. Simplify Administrative Functions and Reduce Paperwork By late fall 2003, HIPAA requires use of standardized billing forms and codes and each insurer will implement systems to accept electronic claims from providers. We propose mandating that all providers use electronic claims submission, data exchange, referral submissions/approval and eligibility verification by 2005. The State will seek funding to facilitate this requirement by making available grants and loans for providers.

9. Enhanced Public Purchasing The Governor will create by Executive Order a Public Purchaser's Steering Group to coordinate public entities and improve their capacity to purchase cost effective, high quality health services.

10. Strengthen Oversight of Insurance Costs Insurance regulations will be revised to require rate approval in the small group market and to increase accountability in the large group market by requiring insurers to file an actuarial certification, stating that rates were developed in accordance with all relevant state requirements. In addition, standard reporting definitions will be established and required to make annual reports comparable and understandable to the public.

11. Reduce Cost Shifting If insurance coverage is extended to the uninsured, a significant reduction in bad debt and charity care will result. Those costs are now shifted to private payers. As such, bad debt represents a substantial hidden tax on health insurance costs and premiums; in fact, 16% of total premium costs today are attributable to bad debt and charity care costs. We will recoup some of the estimated costs of bad debt and charity care through assessments on insurance premiums to provide access to uninsured individuals and families.

MaineCare reimburses providers at lower than market rates. Savings accruing to MaineCare through enactment of this reform proposal will be available for future rate increases for providers, with a focus on paying providers based on performance goals.

12. Voluntary Limits to Control the Growth of Insurance Premiums and Health Care Costs Building on a proposal from a collaborative in Southern Maine, the Health Care Challenge, we will ask all providers to hold price increases and operating margins to no more than 3% and insurers to limit underwriting gains to 3% through 2004. Utilization will be closely tracked as well and a report made at year end to determine the effectiveness of voluntary controls. The Governor's Office of Health Policy and Finance will be authorized to develop rate setting, global budgets and other mechanisms if voluntary measures are deemed ineffective.

Strategies to Address Health Care Quality

13. Establish the Maine Quality Forum The Forum will be an independent, quality watchdog and resource center with its own advisory board. It will promote rapid deployment of evidence-based medicine and best practices; measure, compare and report on health care performance; conduct consumer education and conduct technology assessments to guide the diffusion of new resources. The Forum will be financed, in part, through the recovery of bad debt and charity care expenses.

14. Promote More Effective Use of Data The Governor's proposal calls for greater integration of state data into the Maine Health Data Organization's database to cultivate a valuable resource for health planning, oversight and quality improvement. The MHDO database will be complemented by private sector databases managed by the Maine Health Data Partnership. The enhanced data set will support the design of the State Health Plan, administration of the CON Program, efforts of the Maine Quality Forum, assessment of the voluntary cost containment initiative, and will be a resource for policymakers, planners, researchers and the public.

The MHDO will use the data to prepare publications comparing Maine's health system performance against an array of measures. This information will be made available in an accessible fashion to the public to assist them in making comparisons between providers relative to cost and quality.

15. Protect the Fund for Healthy Maine The Governor will propose a Constitutional amendment to protect for perpetuity the Fund for Healthy Maine and its public health expenditures. In seeking this Constitutional amendment, Maine would become the first state to so protect funds available from the tobacco settlements and assure their on-going availability for public health, prevention and access initiatives.