Maine insurers hit savings estimate

Bangor Daily News
Posted July 25, 2008, at 12 a.m.

AUGUSTA, Maine (AP) — Maine health insurers said Friday that Dirigo Health’ s estimate that the state-backed program saved nearly $150 million in health care costs during the past year is “extremely overstated” and “not credible.”

The Maine Association of Health Plans, a non-profit trade organization that represents the state’ s four major health insurers, issued a sharply worded critique a day after the Dirigo board embraced figures showing that Dirigo achieved the $150 million in savings through avoided costs.

The figure is used in the calculation of so-called “savings offset payments,” which are targeted at insurers and have been a critical funding source for the 5-year-old program that’ s designed to move Maine closer to universal health care.

“For the fourth year in a row, the Dirigo Health Agency board has produced an extremely overstated finding of savings achieved from health plan hospital and physician contract negotiations,” the health insurers’ association said in a statement Friday.

The group said the estimate claims savings that are more than four times higher than those approved by the state insurance superintendent last year, even though Dirigo has fewer members.

“The $149.6 million number chosen by the DHA Board on Thursday is not credible,” the MAHP said.

On Thursday, the Dirigo board voted to forward that savings offset figure to the state Insurance Bureau for a review and hearing, which could be completed in a few months. The figure approved by the Insurance Bureau will go back to the Dirigo board for final approval.

Savings offsets were not Dirigo’ s preferred funding source. But newly enacted tax increases on beer, wine and soda that would have covered Dirigo expenses are being challenged and may not survive a November referendum.

“We obviously had not wanted to be here,” Trish Riley, Gov. John Baldacci’ s health policy director, said after Thursday’ s Dirigo board vote.

In embracing the $149.6 million figure, the board trimmed an earlier savings offset estimate by staff and consultants that added up to $190 million.

Of the revised savings, $119.4 came from voluntary hospital cost controls, $6.6 million from insurance administrative efficiencies, and $23.6 million in avoidance of bad debt and charity care because more people are insured.

The Maine Association of Health Plans said replacing the savings offset process would be in the best interest of Dirigo Health. It said inflated figures could increase the number of uninsured rather than expand coverage because fewer employers will be able to offer health insurance to their employees.

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http://bangordailynews.com/2008/07/25/sports/maine-insurers-hit-savings-estimate/ printed on December 25, 2014