Dirigo health plan still too expensive for some

Posted May 22, 2009, at 8:37 p.m.

Rosemary Gladstone is all about good health. Gladstone’s Under the Sun, the Hancock company she founded in 2001 with her husband, Craig, has developed a health-conscious and environmentally friendly process for drying wild Maine blueberries for use in granola and other prepared foods. She thinks people have a responsibility to take care of themselves, and she believes employers have a responsibility to take care of their workers.

So back in 2004, Gladstone decided to offer health insurance for her employees — all eight of them, including her husband and herself. She shopped around and settled on the state’s new subsidized DirigoChoice program, which was designed to meet the needs of small businesses like hers.

It hasn’t worked out all that well.

Even with the discounts the Dirigo program offers to lower-income enrollees, she said, and although the company will pay 60 percent of each worker’s monthly premium, most still have found their share too pricey and have opted out of the coverage.

“I find it really sad,” Gladstone said. “Some of them have never had health coverage at all, and most of them say they don’t expect us to provide it.” For the time being, she said in a recent interview, the couple and their teenage son are the only ones covered under the company’s policy.

Like Gladstone’s Under the Sun, about 90 percent of all businesses in Maine have fewer than 20 people on their payrolls. Businesses with fewer than 50 employees account for about 96 percent of all businesses in the state.

That makes small businesses — and even smaller “microbusinesses” with fewer than five workers — an integral part of Maine’s economic landscape, according to Jim McConnon, a professor of economics at the University of Maine in Orono.

“Small business is the backbone of the Maine economy,” McConnon said. “And there is no question that health insurance is an extremely important issue to those businesses.” For self-employed artists, small-scale organic farmers and technology entrepreneurs, he said, health coverage provides a level of personal and financial security that supports business start-ups and allows them to recruit a qualified and stable work force.

Yet according to a 2004 survey of Maine’s small businesses conducted for the Maine Center for Economic Policy, almost half — 47 percent — do not offer health insurance to their employees. Many employers that do offer insurance are having to reduce benefits and require employees to pay a greater share of premiums, deductibles, co-payments and other out-of-pocket expenses, according to policy center director Christopher St. John.

“The cost increases have been relentless and high,” he said.

Trish Riley, director of Gov. John Baldacci’s Office of Health Policy and Finance, said stories like the Gladstones’ are regrettably common. The five-year-old DirigoChoice program, of which she was the primary architect and remains a champion, has fallen short of enrollment expectations as it and other small-group insurance options in Maine have increased in price.

But there’s hope on the horizon, Riley said.

“The federal response [to the health care crisis] is really encouraging,” she said. That includes the Obama administration’s recognition of the scope and complexity of the problem and its commitment to reform the nation’s health care system, she said, as well as efforts like those of Maine’s U.S. Sen. Olympia Snowe.

Snowe, the ranking Republican on the Senate Small Business Committee, co-sponsored a bill last year known as “the SHOP Act” — the Small Business Health Options Program. The program would allow sole proprietors and small businesses to form a nationwide pool to shop for private health insurance. This would, in theory, increase competition and drive down costs. SHOP also proposes tax credits for employers who offer coverage, and it would prohibit the insurance industry practice of raising an employer group’s premiums if one individual in the group becomes seriously ill or injured and makes heavy use of the insurance benefit.

A spokeswoman for Snowe’s office said Thursday that the senator is working to have the elements of the SHOP Act incorporated into the overall health reform legislation being crafted in Washington.

Snowe has said she supports a national reform based on regulating insurance markets to increase competition while ensuring consumer protections. The primary alternative under consideration — a single-payer, government-run plan similar to Medicare — “is no panacea and should be a last resort,” according to a recent statement from Snowe’s office.

Rosemary Gladstone thinks the nation’s employer-based private insurance coverage system has proven a failure. She thinks a single-payer system is a better idea, and that people should be required to have insurance of one sort or another.

She worries that the Dirigo program, in danger of losing its funding, will collapse.

For now, though, she’s just glad to have coverage.

“I love having health insurance,” she said. “It gives me more motivation to take care of myself, and it provides an extra layer of stability.”

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