Health & Human Services

Maine's Lessons for National Health-Care Reform

In 2003, Maine passed the at-times controversial Dirigo Health reform initiative. Seven years later, what has Maine learned to help other states reform health care?
by | October 26, 2010
Trish Riley, Director of the Maine Governor's Office of Health Policy and Finance
Trish Riley, Director of the Maine Governor's Office of Health Policy and Finance

Trish Riley is, very simply, one of the most respected figures in the world of state health-care policy. In her current position, Riley serves as director of the Maine Governor's Office for Health Policy and Finance. Prior to that, she served as executive director of the National Academy for State Health Policy. As Gov. John Baldacci's top health aide -- and one of the driving forces behind Maine's at-times controversial Dirigo Health Reform initiative -- Riley has been at the center of recent debates about expanding access, containing costs and reforming entrenched systems. I recently caught up with Riley to discuss what she's learned in the process of implementing health-care reform in a state of 1.3 million people. Below is an edited transcript of the interview.

You've had a lot of experience working in state government. But prior to joining Gov. Baldacci's administration, it had been a while since you'd been in the public sector. Has the experience of working for state government changed?

It clearly is different. I think the Legislature here is stronger than it was when I was last here, and takes its oversight responsibilities pretty aggressively. The partisanship and number of lobbyists have vastly increased, and I think the responsibilities and the stakes have as well.

Tell us about Dirigo, the health reform experiment Maine launched back in 2003. What was the basic idea?

The plan was a comprehensive approach to address cost, quality and access. [The idea was] that it was a three-legged stool and you couldn't do one without the other, and that by improving quality and lowering cost growth, you would also make coverage more available for people. But it was not just a subsidized insurance product, though that was part of it. It was also the broader strategies to make access more available and affordable.

And how did Maine seek to achieve those interrelated goals?

Well, our original proposal was to fund it by a 4 percent assessment on claims, on insurance premiums -- that could not be passed on to policyholders -- and by global budgets on hospitals. But both were fought ferociously by the various industries. Both were compromised away and replaced with voluntary targets for the hospitals and a very controversial financing mechanism called the savings offset payment that said we could assess only after we proved savings.

So let's talk about the controversies that surrounded Dirigo's birth.

Part of the reason it became so controversial so quickly was that those who were ideologically opposed to it, on the day we launched, declared us unsuccessful because we hadn't covered all the uninsured. They never bothered to note that (a) the program was for both the un- and underinsured and (b) that we got about an iota of the funding that we had originally proposed. The good news was the plan was passed with a two-thirds bipartisan majority. The bad news is it was stripped of a lot of the funding, so we weren't able to achieve as broad coverage as we had anticipated.

I want to ask you to take a cold-eyed look at Dirigo. What has worked? What's been harder than you thought?

I think the politics and the communication were harder than I thought [they would be]. The [Maine] Heritage Policy Center and others have come after us unrelentingly for failing to cover as many people as we had proposed to do. But that proposal was when we thought we would have other funds or we thought we'd have Medicaid and other cost containment strategies. I think it was the messaging piece -- the communication piece -- we did not do effectively. We needed to reset expectations when the program was so fundamentally changed, and we didn't.

Has Dirigo succeeded in curbing cost growth?

We've documented $180 million in cost savings. That's independent data that shows we have slowed the cost curve for employer coverage. But it's really hard for people to understand that savings is reduced growth. If you're a small business or an individual, you want to see lower premiums. You don't win by saying, "It would have been higher, but for us."

Maine Govenor's Office of Health Policy and Finance

How does Dirigo's vision of health reform compare to the federal vision of health reform spelled out in the Affordable Care Act?

We've very much structured Dirigo like the exchanges envisioned in the federal law. It has call centers and websites, and it negotiates on behalf of individuals and small businesses. So the struggles have been profound, but I think the message is we passed it before anybody else passed such a comprehensive reform -- we sustained it and we fixed it. And just last week, we announced individuals in Dirigo will have a zero percent premium increase while individual non-group premium rates grew at double digits among our competitors.

You're referring to DirigoChoice, a set of policies offered by Harvard Pilgrim. But several other insurers have withdrawn from the Maine market in recent years, haven't they?

Over the last decade, yes. Some would argue that resulted when we passed guaranteed issue and community rating. Others would argue it's because there's been a natural merger of insurance companies.

Do you think that promoting competition among health insurers is something that state officials ought to be doing?

I think you have to make policy decisions about what your tools are. The bottom line is that insurance companies need to negotiate with provider networks as well. So you have to look at both provider costs, as well as the insurance companies' effort to negotiate best price. I think even in a regulatory environment like Maine, even with more competition, you still have the same provider costs.

And in a certain sense, having more insurers means more parties for providers to play off against each other.

That's right, and I think in a state like this -- that's rural and where we've built these health systems -- we've reached a challenging point. The good news about the health systems is that they are broad, they've improved quality. Most doctors now are affiliated with or work for hospitals in Maine's small hospitals, so there are very few independent practicing physicians.

That's really interesting.

We've been trying to move them to systems of care, sort of like the accountable care organization notion, because the value of those systems and systemness is high. But it also leads to a very challenging environment to get cost containment.

And why is that?

Because if you are a health system that has affiliated with it 14, 15, 16 hospitals and all the physicians, and you sit down to negotiate with insurance companies, you're in a pretty good bargaining position.

That's such an interesting point. I feel like there's a lot of clamor at the state level for more competition among health insurers, even though if you plot premium increases against market consolidation, you'd see that there's actually no correlation between a higher than average kind of premium increase in consolidation.

I think it's a little bit knee jerk to assume that competition is a silver bullet. Consolidation can do a lot of good. It takes and extends electronic medical records systems and quality systems to smaller hospitals. It creates economies of scale. It creates some accountability for these health systems. But it also invites either new negotiated or regulatory structures to be able to negotiate rates. I think things have come full circle. We know that we pay for great things and that we pay too much for health care compared to everyone else. [We need a different approach where] we say, "We'll give you the people. You figure out how to do this better, and we'll share savings or we'll negotiate rates," or whatever. I think that's where the future is going to move us. But this interim period is a struggle.

How have your experiences in Maine affected your reaction to health reform at the national level?

I think to see the attacks that are coming fast and furious; it's exactly what we experienced. There's confusion in the minds of the public about [what is happening]. But I do think the right approach is a comprehensive one. While the federal reforms arguably don't go far enough on the cost containment side, they do promote really important initiatives to test cost strategies. Although many would like it to be more comprehensive, it's a commitment to access, it's a commitment to cost and quality, and I think that's just enormous. It nationalizes eligibility for Medicaid across the country. It no longer matters what your ZIP code is -- you're going to get health coverage if you're poor. It streamlines that eligibility function, which I think is important. It begins to sort of nationalize quality data, and I think all of that is very important. You know, states like flexibility, but when it comes to health coverage, this kind of standardization, I think, makes great sense and is very exciting for the people in our states. The challenges are the political ones.

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