For years, Maine has been unwilling to wait for the federal government to tackle the crisis of health care. And with good reason: though Maine has one of the lowest rates of uninsurance, it has some of the most expensive health care in the country. One-third of the state budget goes to SCHIP/Medicaid (the highest rate in the country, the state has the highest employer contribution to the cost of employer-based insurance, and the third-highest per capita health care costs. Not surprisingly, the cost drivers that make Maine's health care so expensive are the same as those that afflict the national as a whole, according to a new report by a state advisory group.

In 2003, the Maine Legislature passed far-reaching legislation to tackle coverage and costs—including the creation of the Dirigo Health insurance program—that included aggressive collection of data that had not previously been available. Maine's Advisory Council on Health Systems Development outlined problems and proposed solutions that will look familiar to those who've followed the health reform debate at the national level.

First, the council crunched the numbers on utilization based on public and private claims data. Essentially, Maine created a smaller scale Dartmouth Atlas. They found huge and unwarranted variability across the state's 24 "hospital utilization areas" in both private and public health insurance. Many of the state's inpatient hospitalization dollars are wasted.

Second, the council proposed moving toward "evidence-based benefit design." This is a recognition that fee-for-service provides no incentive for better medicine, just more medicine, and that incentives are needed to dampen demand for those services that add little value. The council suggests tiering providers based on value metrics from cost and quality data—an ambitious and controversial but worthy project. 

Maine also has emergency room utilization rates 30 percent higher than the New England average. Though the report noted that emergency rooms are not a significant portion of Maine's health care costs, high emergency room use means long waits and fragmented care.   

There are a couple of lessons here. First, without the huge amount of data that Maine gathered from claims to public and private insurers, much of the analysis would be impossible. We hope that the health IT provisions of the economic stimulus law will make new population-level data available and facilitate more of this kind of analysis. Next, to reduce utilization of health resources that don't improve health, we need to change the incentives. If the  incentives are for more utilization, you get more utilization. If we create incentives for smarter utilization, we'll get smarter utilization. We vote for smarter.