Can it work? Three New England states have made bold reforms in how we provide health care in America. What can we learn from their lead?

• Author: Tobler, Laura
• Position: UNIVERSAL HEALTH CARE

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Health reform swept the nation's capitols in 2007 with at least 28 states considering new laws or discussing proposals to change the system--some inching toward the goal of universal coverage and others taking a giant step. Leading the way for this somewhat uncharted course are three New England states: Maine, Massachusetts and Vermont.

Maine led the most recent wave of health reform in 2003. The goal of Maine's Dirigo Health is to contain costs and improve the quality of care, aiming for universal coverage by 2009. Taking its name from the Latin state motto that means "I lead," Dirigo is a statewide plan for improving and changing the health care system. It requires public disclosure of prices for medical services, simplification of administrative functions, reductions in paperwork, and voluntary limits on the growth of health insurance premiums and health care costs. The state also established the Maine Quality Forum to promote better quality of care and DirigoChoice to offer affordable, partly subsidized health insurance to small businesses and those without employer-sponsored insurance.

On April 12, 2006, Massachusetts enacted legislation aiming for near-universal health insurance coverage. The law distributed responsibility for coverage among individual state residents, who are required to purchase health insurance; the government, which offers new subsidies to ensure affordability; and employers, who pay an assessment for uninsured employees. "'Health care reform could not be achieved unless we adhered to the principle established in our Massachusetts Constitution of shared responsibility," House Speaker Salvatore F. DiMasi says. "Our commitment to this principle ensured the passage of our health reform bill."

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The Massachusetts law also creates the Commonwealth Health Insurance Connector, which, among other things, assists small businesses and individuals in navigating the insurance marketplace.

One month later, Vermont adopted health reform legislation designed to make affordable health insurance more available, improve the quality of health care and control costs. Two key components of this reform are subsidized health insurance for low-income Vermonters and a statewide effort to improve health care by managing chronic diseases. Employers in Vermont will also be assessed for certain uninsured employees.

With health care reform still high on almost every state's legislative agenda, what have we learned from these three states?

COVERING THE UNINSURED

The foundation of coverage in Maine, Massachusetts and Vermont is an expanded Medicaid and SCHIP program. Each state covers the poorest of the uninsured with these publicly funded programs--beyond levels that are covered in many other states. For people above the eligibility levels, the states created health insurance programs that are publicly subsidized on a sliding scale based on income.

The centerpiece of the Maine reform is DirigoChoice, an insurance plan for businesses with 50 or fewer employees, the self-employed and individuals. The state projected initial enrollment for this program to be around 30,000 with an overall goal of universal coverage by 2009. To date, the plan has enrolled about half that amount, many of whom were already insured. Although enrollment numbers are lower than the state planners hoped, the DirigoChoice insurance plan has grown faster than any in Maine's history, according to Representative Ann Perry, co-chair of the Health and Human Services Committee.

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Maine found that financing health reform can be the Achilles's heel. Maine has struggled with the primary financing mechanism for Dirigo--a "savings offset payment (SOP)" program. The Dirigo board of directors determines the aggregate measurable cost savings in the health care system, which is then filed with the superintendent of insurance, who makes the final determination. Under this system, health insurers and self-funded plans pay a claims assessment that changes each year depending upon this agreed upon savings. The system has been challenged in court and upheld, but the real problem has been in the determined amount of savings, which has been less than projected.

"This year the Bureau of Insurance has determined that Dirigo saved the system around $40 million, which translates into a tax of 1.74 percent that is paid on all health insurance claims...