This is a rush transcript from "Hannity," October 22, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: President Barack Obama says the government option is an essential part to health care reform, and Democrats in Congress continue to indicate that a government option is still on the table. So if their wishes come true, what would that option really look like?

Griff Jenkins traveled to Maine, where residents there know all too well about the impact of a government takeover of the health care system.

(BEGIN VIDEOTAPE)

GRIFF JENKINS, FOX NEWS (voice-over): Democrats in Washington have sent a clear message to the president and the American people: They want a public option.

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REP. NANCY PELOSI, D-CALIF., SPEAKER OF THE HOUSE, OCT. 15: The need for a public option is very clear and, as I have said, are past due. Our bill will have a public option.

JENKINS: But a short trip to the land of lighthouses offers a daunting look at how the public option my fare at the national level. Maine's motto is "dirigo," Latin for "I lead." And that's just what Maine did in 2003.

(on camera) They signed into law the state's first attempt at a so- called public option, government-assisted health care plan. It was named, appropriately, Dirigo care.

SEN. MITCH MCCONNELL. R-KY., MINORITY LEADER, JULY 15: Six years ago, Maine institute — instituted Dirigo Health, Dirigo Health as a government option after advocates made the same promises about what it would do to bring down costs and increase access that the advocates of a nationwide government health care plan are making right now here in Washington.

JENKINS (voice-over): Dirigo had three major components that when compared to Obama's plan, the similarities are startling.

First, it sought to cover all of the uninsured.

PRESIDENT BARACK OBAMA, SEPT. 12: My plan will provide more security and stability for those who have health insurance, offer quality, affordable choices to those who currently don't.

JENKINS: Second, it was to be paid for by government-created savings.

OBAMA, SEPT. 9: We've estimated that most of this plan can be paid for by finding savings within the existing health care system.

JENKINS: And third, it promised, no new taxes.

OBAMA, FEB. 24: You will not see your taxes increased a single dime.

JENKINS: So how is Dirigo supposed to work for Maine's small population of 1.3 million? Trish Riley is the state's director of the Governor's Office of Health Policy and Finance.

TRISH RILEY, GOVERNOR'S OFFICE OF HEALTH POLICY AND FINANCE: It was comprehensive reform. It was designed to address costs, quality and access to health care, very much more than just an insurance product. It's built on the Medicaid program in the state to make sure the lowest income people had coverage. It then created a subsidized health insurance product on top of that for those people, particularly on Medicaid, who earn $1 too much and fall off the cliff.

JENKINS: It was a noble goal, says Maine's current speaker of the house.

HANNAH PINGREE, D-MAINE, SPEAKER OF THE MAINE HOUSE OF REPRESENTATIVES: It was exciting. I mean, it was a step in the right direction. It was a step towards universal health care. The entire idea behind Dirigo was that health care was based on your ability to pay. So we would offer people discounts or vouchers so that they could buy insurance.

JENKINS: For the most part, the folks of Maine looked favorably upon the attempt.

MIKE VIOLETTE, PORTLAND, MAINE, RADIO TALK SHOW HOST: People actually were into it. It sounded beautiful. I mean, we're going to ensure 140,000 people who have never had insurance or have bad insurance. And we're going to do it in a very cost-effective fashion. What's not to like?

MCCONNELL, JULY 15: Yet, six years later, the Dirigo experiment has turned out to be a colossal and extremely costly failure.

JENKINS: So what went wrong with Dirigo?

Tarren Bragdon at the Maine Heritage Policy Center says the program failed in practice.

TARREN BRAGDON, MAINE HERITAGE POLICY CENTER: What happened is we set up this plan that was very, very heavily subsidized, and people flocked to it. And then, because people got something for very little cost, utilization went through the roof. And so premiums just skyrocketed, up 74 percent.

JENKINS: Joe Bruno was the state House Republican leader at the time of Dirigo's inception. He now sits on the board at Dirigo.

JOE BRUNO, DIRIGO BOARD MEMBER: It doesn't work. Dirigo has not even come close to fulfilling its promise of covering the uninsured in the state of Maine.

We can't provide this plan to everyone, because we're not getting enough revenue in the plan. There's not enough cost savings in health care in the state, as defined by the plan, to fund more people.

BRAGDON: Dirigo, just like what Congress is trying to do, said, "We will cover you at any time, no matter what, with no pre-existing condition exclusions." And that's what drove up costs.

People cycle on when they're sick, and they cycle off when they're healthy. They get sick again, they cycle back on. And the program is structured in a way that encourages them.

PINGREE: Dirigo was slipped up by a number of different things. And so I would say was a valuable experiment.

JENKINS: So here's the question: Is Dirigo a true public option like the one President Obama has been pushing for?

RILEY: It doesn't set the benefits. It doesn't set the rates. It doesn't set the — even the premiums that are negotiated with the — with the carrier. It is run as a fully insured product by a fully licensed private insurance company. So it's a public-private partnership.

JENKINS (on camera): The governor's point person, Trish Riley, says this is not a public plan.

BRAGDON: I think that's completely disingenuous. Her own Dirigo health agency administrator describes the Dirigo choice as a model of the public plan under Obama care.

JENKINS: At its highest level of enrollment, only about 15,000 Mainers were covered under Dirigo. Today, it's less than 10,000. That's a far cry from the original goal, which was to cover 128,000.

MCCONNELL, JULY 15: Despite initial promises, it has not covered most of the uninsured. And yet, it's led to higher taxes on thousands of Maine residents.

BRAGDON: Originally, it was supposed to be paid for by government creating savings in the health care system, similar to the rhetoric we hear from Washington.

But what we're seeing is the plan is bankrupt. And just this year, the legislature passed a new 2.4 percent tax on private health claims to pay for it.

MCCONNELL, JULY 15: Senator Collins, for example, has discussed the problems they've had in Maine as a result of its attempt to create a government-run health plan.

JENKINS: Do you oppose the public option because of what you saw happen in your own state of Maine with Dirigo Health?

SEN. SUSAN COLLINS, R-MAINE: I opposed the public option for philosophical reasons. I don't think that the government should be competing with the private sector.

I also am aware of what happened in Maine with the public plan. And it did not live up to the promises, a lot of the same promises that are being made now.

JENKINS (voice-over): Maine's other Senator Olympia Snowe, was the lone Republican on the Senate Finance Committee to cross party lines and vote for the Democratic health care bill, but she says she's still skeptical of including a public option.

SEN. OLYMPIA SNOWE, R-MAINE, OCT. 13: I have heard my Republicans concerns about a vast governmental bureaucracy and governmental intrusions. That's why I opposed the amendment, the so-called public option.

JENKINS: She says the experience in Maine has played a part in those concerns.

SNOWE: It certainly is the basis for understand that the public approach experience — it has been an expensive option in the state of when Maine. It has not been able to meet its goals because it has been so expensive. It has not been able to insure as many people as originally protected.

So it is an experience that we have to consider as we move forward in examining the public option approach that has been proposed by so many here in Congress.

JENKINS (on-camera): The experiment in health care here in Maine, it has a government component and some call a public option, has been met with dire fiscal realities. Premiums in the plan continue to rise, and enrollment has been capped.

All results perhaps the leaders in Washington and President Obama may want to consider before signing such a plan into law.

BRAGDON: For a state of 1.3 million people, having a bankrupt plan is bad enough. But if you're replicating it for 300 million patients across the country, that's a disaster.

(END VIDEOTAPE)

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