Maine’s Dirigo Health Reform: Maine’s Dirigo Health Reform: Leading the WayLeading the Way

to Universal Coverage? to Universal Coverage?

Maine’s Dirigo Health Reform: Maine’s Dirigo Health Reform: Leading the WayLeading the Way

to Universal Coverage? to Universal Coverage?

Academy HealthAcademy HealthState Health Research & PolicyState Health Research & Policy

Interest GroupInterest GroupJune 2, 2007June 2, 2007

Debra J. LipsonDebra J. Lipson

Academy HealthAcademy HealthState Health Research & PolicyState Health Research & Policy

Interest GroupInterest GroupJune 2, 2007June 2, 2007

Debra J. LipsonDebra J. Lipson

2

Dirigo Health Reform GoalsDirigo Health Reform GoalsDirigo Health Reform GoalsDirigo Health Reform Goals

Make affordable health care coverage Make affordable health care coverage available to every Maine citizen by available to every Maine citizen by 2009 (~ 140,000 uninsured in 2003)2009 (~ 140,000 uninsured in 2003)

Slow the growth of health care costs Slow the growth of health care costs through cost containmentthrough cost containment

Improve quality of careImprove quality of care——for example, for example, by comparing provider performance by comparing provider performance to quality measuresto quality measures

Make affordable health care coverage Make affordable health care coverage available to every Maine citizen by available to every Maine citizen by 2009 (~ 140,000 uninsured in 2003)2009 (~ 140,000 uninsured in 2003)

Slow the growth of health care costs Slow the growth of health care costs through cost containmentthrough cost containment

Improve quality of careImprove quality of care——for example, for example, by comparing provider performance by comparing provider performance to quality measuresto quality measures

3

OverviewOverviewOverviewOverview

Evaluation questionsEvaluation questions

Study design, methods, and data sourcesStudy design, methods, and data sources

Preliminary findingsPreliminary findings

Lessons for other statesLessons for other states

Caveats and challengesCaveats and challenges

Evaluation questionsEvaluation questions

Study design, methods, and data sourcesStudy design, methods, and data sources

Preliminary findingsPreliminary findings

Lessons for other statesLessons for other states

Caveats and challengesCaveats and challenges

4

Evaluation QuestionsEvaluation QuestionsEvaluation QuestionsEvaluation Questions

Are low-income uninsured people gaining coverage Are low-income uninsured people gaining coverage under DirigoChoice or Medicaid?under DirigoChoice or Medicaid?

How have small employers responded to the How have small employers responded to the availability of DirigoChoice? availability of DirigoChoice?

Are the DirigoChoice subsidy financing sources Are the DirigoChoice subsidy financing sources adequate and sustainable to cover many more low-adequate and sustainable to cover many more low-income uninsured?income uninsured?

Is Maine’s approach to health coverage expansion Is Maine’s approach to health coverage expansion relevant elsewhere? What can other states learn relevant elsewhere? What can other states learn from its experience?from its experience?

Are low-income uninsured people gaining coverage Are low-income uninsured people gaining coverage under DirigoChoice or Medicaid?under DirigoChoice or Medicaid?

How have small employers responded to the How have small employers responded to the availability of DirigoChoice? availability of DirigoChoice?

Are the DirigoChoice subsidy financing sources Are the DirigoChoice subsidy financing sources adequate and sustainable to cover many more low-adequate and sustainable to cover many more low-income uninsured?income uninsured?

Is Maine’s approach to health coverage expansion Is Maine’s approach to health coverage expansion relevant elsewhere? What can other states learn relevant elsewhere? What can other states learn from its experience?from its experience?

5

Study Design & MethodsStudy Design & MethodsStudy Design & MethodsStudy Design & Methods

Mixed Methods: Qualitative & QuantitativeMixed Methods: Qualitative & Quantitative

– Analysis of DirigoChoice administrative data Analysis of DirigoChoice administrative data on enrolled firms and individualson enrolled firms and individuals

– Survey of small businesses in MaineSurvey of small businesses in Maine

– Key stakeholder interviewsKey stakeholder interviews

– Systematic comparison of Maine to other states Systematic comparison of Maine to other states vis-a-vis: health insurance coverage, small group vis-a-vis: health insurance coverage, small group and individual market regulations, health care and individual market regulations, health care delivery system, Medicaid policiesdelivery system, Medicaid policies

Mixed Methods: Qualitative & QuantitativeMixed Methods: Qualitative & Quantitative

– Analysis of DirigoChoice administrative data Analysis of DirigoChoice administrative data on enrolled firms and individualson enrolled firms and individuals

– Survey of small businesses in MaineSurvey of small businesses in Maine

– Key stakeholder interviewsKey stakeholder interviews

– Systematic comparison of Maine to other states Systematic comparison of Maine to other states vis-a-vis: health insurance coverage, small group vis-a-vis: health insurance coverage, small group and individual market regulations, health care and individual market regulations, health care delivery system, Medicaid policiesdelivery system, Medicaid policies

6

Data Sources & AnalysesData Sources & AnalysesData Sources & AnalysesData Sources & Analyses

• Policy goalsPolicy goals

• FinancingFinancing

• Regulatory & market contextRegulatory & market context

• Policy goalsPolicy goals

• FinancingFinancing

• Regulatory & market contextRegulatory & market context

Dirigo ChoiceDirigo ChoiceDirigo ChoiceDirigo Choice Comparison to Other StatesComparison to Other StatesComparison to Other StatesComparison to Other States

Key stakeholders’ Key stakeholders’ views of progress, views of progress, problemsproblems

Key stakeholders’ Key stakeholders’ views of progress, views of progress, problemsproblems

Small employersurvey

Small employersurvey

DirigoChoice & Medicaidenrollment

DirigoChoice & Medicaidenrollment

7

Dirigo Choice EnrollmentDirigo Choice EnrollmentJanuary 2005–September 2006January 2005–September 2006

Dirigo Choice EnrollmentDirigo Choice EnrollmentJanuary 2005–September 2006January 2005–September 2006

12,000

0

2,000

12,000

Jan05

Feb05

Mar05

Apr05

May05

Jun05

Jul05

Aug05

Sep05

Oct05

Nov05

Dec05

Jan06

Feb06

Mar06

Apr06

May06

Jun06

Jul06

Aug06

Sep06

Me

mb

ers

Small group Sole proprietor Individual

Sole prop/individual enrollment cap liftedFreeze on childless adult

MaineCare enrollment

MaineCare expansion to parents

150% FPL - 200% FPL

Individual enrollment begins

Sole prop/ individual enrollment cap reached

6,000

4,000

10,000

8,000

8

Net Monthly Enrollment of Small-Firm Workers

Net Monthly Enrollment of Small-Firm Workers

575

675

Jan Feb Ma- Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep05 05 05 05 05 05 05 05 05 05 05 05 06 06 06 06 06 06 06 06 06

-25

375

575

475

275

175

75

9

Enrollment in Dirigo HealthEnrollment in Dirigo HealthMedicaid Expansion GroupsMedicaid Expansion GroupsEnrollment in Dirigo HealthEnrollment in Dirigo Health

Medicaid Expansion GroupsMedicaid Expansion Groups

0

5000

10000

15000

30000

Sep-0

2

Nov-02

Jan-0

3

Mar

-03

May

-03

Jul-0

3

Sep-0

3

Nov-03

Jan-0

4

Mar

-04

May

-04

Jul-0

4

Sep-0

4

Nov-04

Jan-0

5

Mar

-05

May

-05

Jul-0

5

Sep-0

5

Nov-05

Jan-0

6

Mar

-06

May

-06

Jul-0

6

Sep-0

6

Nov-

06

Date

Mo

nth

ly C

asel

oad

Childless Adults ("Non-categoricals") Medicaid Expansion to Parents

January 05: DirigoChoice beganMarch 05: Childless adult "non-categorical" freeze instituted

July 06: “Non-categorical” freeze lifted

April 05: Parent Expansion (150-200% FPL)

2500025000

2000020000

10

Dirigo Choice Subsidy Levels Distribution of Enrollment by Member Type

Dirigo Choice Subsidy Levels Distribution of Enrollment by Member Type

0 10 20 30 40 50 60 70 80 90 100

Small GroupSmall groupSmall group

Sole proprietor

Individual

Percent of enrollees

A (MaineCare)

No discount

B

C

D

E

11

Enrollment in DirigoChoice Enrollment in DirigoChoice by Uninsuredby Uninsured––2006 Enrollees2006 EnrolleesEnrollment in DirigoChoice Enrollment in DirigoChoice

by Uninsuredby Uninsured––2006 Enrollees2006 Enrollees

4%4%3%9%Response not usable

31%28%30%37%Uninsured

65%68%67%54%Prior coverage

TotalIndividualsSole

proprietorsSmall firm workers

12

Small Employer SurveySmall Employer SurveyFirm Characteristics by Offer TypeFirm Characteristics by Offer Type

Small Employer SurveySmall Employer SurveyFirm Characteristics by Offer TypeFirm Characteristics by Offer Type

24++

(17%)36++

(30%)89++

(17%)149

(19%)Professional services & management (industry type)

Average wage

12%*32%**17%18%Mean percent who earn more than $18 per hour

33%* 43%**39%38%

Mean percent who earn $12 to $18 per hour

55%**26%**45%44%Mean percent who earn less than $12 per hour

5.0**17.7**6.78.1Mean number of employees

143(18%)

121(16%)

509(66%)

773(100%)All firms

Coverage offered

None Another plan DirigoChoice All firms

responding Firm characteristics

*p < .05 ** or ++ p < .01

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Change in Employer Premiums Change in Employer Premiums Dirigo Choice vs. Prior CoverageDirigo Choice vs. Prior CoverageChange in Employer Premiums Change in Employer Premiums

Dirigo Choice vs. Prior CoverageDirigo Choice vs. Prior Coverage

20%

32%

33%

16%

47%

52%

Annual deductible

Premiumcontribution

Average reported difference between DirigoChoice and prior plan

Higher Same Lower

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Why Firms That Considered Why Firms That Considered DirigoChoice Did Not Enroll (n = 78DirigoChoice Did Not Enroll (n = 78)

Why Firms That Considered Why Firms That Considered DirigoChoice Did Not Enroll (n = 78DirigoChoice Did Not Enroll (n = 78)

Too costly or not affordable Too costly or not affordable

Benefits offered do not fit Benefits offered do not fit employees’ needsemployees’ needs

Did not qualify for DirigoChoiceDid not qualify for DirigoChoice

Other reasonsOther reasons

Too costly or not affordable Too costly or not affordable

Benefits offered do not fit Benefits offered do not fit employees’ needsemployees’ needs

Did not qualify for DirigoChoiceDid not qualify for DirigoChoice

Other reasonsOther reasons

45 (58%)45 (58%) 45 (58%)45 (58%)

19 (25%)19 (25%)

6 (8%)6 (8%)

8 (10%)8 (10%)

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Key Stakeholder Views of DirigoChoiceKey Stakeholder Views of DirigoChoiceKey Stakeholder Views of DirigoChoiceKey Stakeholder Views of DirigoChoice

StrengthsStrengths

– Benefits are more comprehensive than Benefits are more comprehensive than most small group and individual policies most small group and individual policies in the marketin the market

– Subsidies for premiums and deductibles made Subsidies for premiums and deductibles made the product affordable for low-income individualsthe product affordable for low-income individuals

StrengthsStrengths

– Benefits are more comprehensive than Benefits are more comprehensive than most small group and individual policies most small group and individual policies in the marketin the market

– Subsidies for premiums and deductibles made Subsidies for premiums and deductibles made the product affordable for low-income individualsthe product affordable for low-income individuals

16

Stakeholder Views, Stakeholder Views, cont’dcont’dStakeholder Views, Stakeholder Views, cont’dcont’d

WeaknessesWeaknesses

– Small firm enrollment depressed by high premiums, Small firm enrollment depressed by high premiums, 60% employer contribution requirement, weak 60% employer contribution requirement, weak incentives, administrative burdens, and marketing incentives, administrative burdens, and marketing problemsproblems

– Merger of individual and small groups into one pool Merger of individual and small groups into one pool created untenable cross-subsidies created untenable cross-subsidies

– Legal and political clashes over SOP undermined Legal and political clashes over SOP undermined support for programsupport for program

WeaknessesWeaknesses

– Small firm enrollment depressed by high premiums, Small firm enrollment depressed by high premiums, 60% employer contribution requirement, weak 60% employer contribution requirement, weak incentives, administrative burdens, and marketing incentives, administrative burdens, and marketing problemsproblems

– Merger of individual and small groups into one pool Merger of individual and small groups into one pool created untenable cross-subsidies created untenable cross-subsidies

– Legal and political clashes over SOP undermined Legal and political clashes over SOP undermined support for programsupport for program

17

Planned Financing Sources Planned Financing Sources for DirigoChoicefor DirigoChoice

Planned Financing Sources Planned Financing Sources for DirigoChoicefor DirigoChoice

Monthly premium payments by employers, Monthly premium payments by employers, employees, and individualsemployees, and individuals

For low-income subsidies:For low-income subsidies:

– State general revenues (in the first year)State general revenues (in the first year) – Federal Medicaid funds to match employer Federal Medicaid funds to match employer

premiums paid on behalf of Medicaid-eligible premiums paid on behalf of Medicaid-eligible employees in DirigoChoiceemployees in DirigoChoice

– Annual “savings offset payment”Annual “savings offset payment”——assessments assessments on insurers and third-party administrators equal on insurers and third-party administrators equal to the estimated savings from Dirigo Healthto the estimated savings from Dirigo Health initiatives

Monthly premium payments by employers, Monthly premium payments by employers, employees, and individualsemployees, and individuals

For low-income subsidies:For low-income subsidies:

– State general revenues (in the first year)State general revenues (in the first year) – Federal Medicaid funds to match employer Federal Medicaid funds to match employer

premiums paid on behalf of Medicaid-eligible premiums paid on behalf of Medicaid-eligible employees in DirigoChoiceemployees in DirigoChoice

– Annual “savings offset payment”Annual “savings offset payment”——assessments assessments on insurers and third-party administrators equal on insurers and third-party administrators equal to the estimated savings from Dirigo Healthto the estimated savings from Dirigo Health initiatives

18

Savings Offset Payment (SOP):A Financing Innovation?

Savings Offset Payment (SOP):A Financing Innovation?

Extract savings from current spendingExtract savings from current spending

– Fewer uninsuredFewer uninsured

Reduce bad debt/charity careReduce bad debt/charity care Medicaid expansion to childless adultsMedicaid expansion to childless adults

– Lower rate of hospital cost growth via voluntary Lower rate of hospital cost growth via voluntary cost controlscost controls

– CON and capital investment fund savingsCON and capital investment fund savings

– Less cost shifting to other payers via Less cost shifting to other payers via increased Medicaid rates for providersincreased Medicaid rates for providers

Extract savings from current spendingExtract savings from current spending

– Fewer uninsuredFewer uninsured

Reduce bad debt/charity careReduce bad debt/charity care Medicaid expansion to childless adultsMedicaid expansion to childless adults

– Lower rate of hospital cost growth via voluntary Lower rate of hospital cost growth via voluntary cost controlscost controls

– CON and capital investment fund savingsCON and capital investment fund savings

– Less cost shifting to other payers via Less cost shifting to other payers via increased Medicaid rates for providersincreased Medicaid rates for providers

19

Actual DirigoChoice FinancingActual DirigoChoice Financing

Few Medicaid enrollees in DirigoChoice, Few Medicaid enrollees in DirigoChoice, so federal matching funds are minimalso federal matching funds are minimal

Insurers were expected to recover SOP by reducing Insurers were expected to recover SOP by reducing provider payments and passing on the savings to provider payments and passing on the savings to consumers in the form of lower premiums, but they consumers in the form of lower premiums, but they did notdid not

Insurers and employers filed legal challenge to SOPInsurers and employers filed legal challenge to SOP

Maine now considering alternatives to SOPMaine now considering alternatives to SOP

Few Medicaid enrollees in DirigoChoice, Few Medicaid enrollees in DirigoChoice, so federal matching funds are minimalso federal matching funds are minimal

Insurers were expected to recover SOP by reducing Insurers were expected to recover SOP by reducing provider payments and passing on the savings to provider payments and passing on the savings to consumers in the form of lower premiums, but they consumers in the form of lower premiums, but they did notdid not

Insurers and employers filed legal challenge to SOPInsurers and employers filed legal challenge to SOP

Maine now considering alternatives to SOPMaine now considering alternatives to SOP

20

Lessons for Other StatesLessons for Other States

ME = MA + 2?

Voluntary enrollment limits participation

Trade-off between benefits and affordability

Financing expanded coverage still a “holy grail”

ME = MA + 2?

Voluntary enrollment limits participation

Trade-off between benefits and affordability

Financing expanded coverage still a “holy grail”

21

Translating Lessons to Other StatesTranslating Lessons to Other States

ProblemESI, offer rates,

uninsured

Design of coverage strategies

Implementation

Policy goals & focusCoverage expansion

Cost containmentQuality

Market & regulatory context

Insurance marketsHC delivery system

Insurance regulation

Financing sourcesFMAP

State tax policiesUCC pool

Evaluate

22

Caveats and ChallengesCaveats and Challenges

Findings still preliminary

Program changing during evaluation

Discrepancies between findings from 3 sets of data & analyses—how to reconcile?

State officials will have chance to review and comment—how to separate fact from interpretation?

Findings still preliminary

Program changing during evaluation

Discrepancies between findings from 3 sets of data & analyses—how to reconcile?

State officials will have chance to review and comment—how to separate fact from interpretation?

23

Credits and AcknowledgmentsCredits and Acknowledgments Co-authors– Jim Verdier, Lynn Taylor, Shanna Shulman,

Elizabeth Seif, Matt Sloan, Bob Hurley

Sponsors

– The Commonwealth Fund

– The Robert Wood Johnson Foundation, Changes in Health Care Financing and Organization

Co-authors– Jim Verdier, Lynn Taylor, Shanna Shulman,

Elizabeth Seif, Matt Sloan, Bob Hurley

Sponsors

– The Commonwealth Fund

– The Robert Wood Johnson Foundation, Changes in Health Care Financing and Organization