New Report: Universal Health Care in Maine Could Reduce Costs & Cover Everyone

New Report: Universal health care in Maine could reduce costs and cover everyone

DECEMBER 16, 2019

AUGUSTA, Maine — A universal, publicly funded health care system that covers every Maine resident could save Maine $1.5 billion in total health care spending, according to a new analysis released today by Maine AllCare.

The analysis, conducted by Maine Center for Economic Policy (MECEP) on behalf of Maine AllCare, was the subject of a hearing today before the Legislature’s Joint Standing Committee on Health Coverage, Insurance, and Financial Services.

Maine AllCare commissioned the report, Assessing the Costs and Impacts of a State-Level Universal Health Care System in Maine, to find out how such a health system could be financed. This report represents a ‘fiscal plausibility model’ informed by previous analyses of other state-level models. It includes analyses of the costs and economic impact of Maine establishing a universal, publicly funded healthcare system that covers every Maine resident.

The study looked at health care cost scenarios based on seven different families, of varying size and annual incomes ranging from $10,000 to $500,000. All but those with the highest incomes would see savings under the analyzed model. The study shows a state-level plan would provide significant benefits to Maine residents, municipalities and employers and bring fiscal stability to our healthcare providers and hospitals.

“The first question people ask when the subject of universal health care comes up is: ‘How are you going to pay for it?’” said Henk Goorhuis, MD, Board Chair of Maine AllCare. “The truth is America pays more for health care than any other developed nation, all while families continue to skip doctor’s visits or forgo necessary care because they can’t afford it.”

“This feasibility analysis reveals that a better system is possible — one that would guarantee health care that was without charge at the point of service, allow greater choice of providers, and reduce costs in the long run. We just need the political will to create it,” Goorhuis said.

Under the model analyzed by MECEP, federal programs including Medicare, Medicaid, VA, Tricare and Indian Health would remain intact and a state-run program would cover the remaining 652,000 of the population, including roughly 74,000 uninsured Mainers and all those covered (often inadequately) by private insurance. The model fills coverage gaps and eliminates out-of-pocket expenses for those enrolled in federal programs. It also provides dental, vision, and hearing benefits to every Maine resident.

Approximately 80 percent of the cost of a new publicly funded health care system would be paid for in the form of individual and employer taxes that would recapture funds currently being spent on premiums, deductibles, and out-of-pocket costs. The remainder — about $1 billion — would need to be paid for by raising taxes. In this report, MECEP has included several potential revenue sources.

Impacts of the new state-based public healthcare plan include:
– 80 percent of families and individuals would see a net gain in their household income due to elimination of insurance premiums and out of pocket health costs.

– Municipalities, counties and school districts would see an annual net savings of $214 million, or 8.4 percent of current property tax, equivalent to a reduction of 1.5 mills.

– Most employers would pay the same or less than they do today, based on a sliding scale, that spans from 3 percent of payroll for businesses with fewer than 10 employees to 10 percent of payroll for businesses with more than 500 employees.  Workers’ Compensation costs would be cut in half.  Employers would eliminate the costs of choosing and managing healthcare coverage plans.

– Hospitals and providers would be paid promptly and directly at Medicare rates.

– Uncompensated charity care would be eliminated, and administrative overhead would be reduced.

– Most providers would see minimal, if any, net financial effects.

– All hospitals and doctors’ offices would remain private.

– An estimated 2,931 administrative jobs in healthcare would be lost due to a greatly simplified system. The model presumes wage replacement and retraining costs for those workers as part of the transition.

Broader economic benefits would accrue from a healthier workforce, along with increased entrepreneurship when healthcare coverage is decoupled from employment. However, the report cautions a more detailed analysis would be necessary.

“Informed by this report, Maine AllCare’s board of directors — together with the tens of thousands of Maine AllCare supporters — will continue our advocacy and education to transform today’s broken health care system into a new, fair and cost-effective publicly funded system that serves every Mainer,” Goorhuis said.

Click here for Maine AllCare’s four-page summary of the  MECEP report.  For questions about the summary, contact info@maineallcare.org

Click here for a copy of the complete report.  For specific technical questions on the report, contact The Maine Center for Economic Policy.

The audio presentation of the legislative hearing is available at: http://legislature.maine.gov/Audio/#220.