Jonathan McKane: Repealing soda taxes won’t kill Dirigo

Posted Aug. 01, 2008, at 12 a.m.

Supporters of the new Dirigo taxes on soda, beer, wine and health care services have gone on the offensive. In an attempt to frighten and manipulate Maine voters, they have resorted to outrageous claims of dire consequences to Dirigo and our entire health care system should the new Dirigo taxes be repealed in November by a people’ s veto.

Don’ t believe them. Dirigo will continue whether these taxes are repealed or not. No one will lose health care.

As a member of the Legislature’ s Joint Committee on Insurance and Financial Services, I have been present for every legislative hearing, work session and discussion on Dirigo Health over the past four years. I also receive quarterly statements about Dirigo enrollment and finances. The facts about Dirigo tell a much different story than the one Dirigo proponents use in favor of the new taxes on TV and radio and in newspaper columns.

Dirigo is fully funded through the Savings Offset Payment (SOP) and will continue to be funded that way should the people’ s veto to repeal these taxes succeed. The SOP, through an incomprehensible and ever-changing formula, calculates the supposed “savings to Maine’ s health care system,” then taxes insurance companies that amount.

The claims of huge savings to the health care system have never passed the straight-face test and have been the target for ongoing lawsuits by Maine’ s insurers and other entities. After the first year of operation, Dirigo claimed it had saved $133 million. By the time the SOP hearing was finished, Maine’ s superintendent of insurance had dropped that amount to $43 million.

Even that was a stretch. These “savings” included our hospitals’ voluntary freezes and cutbacks, such as delaying capital improvements, forgoing major purchases and freezing personnel wages. All of these expenses will be made up eventually and could hardly be considered savings.

Still, Dirigo claimed these were indeed savings and they got their money — at the expense of all of us who buy health insurance in this state. The insurance carriers simply add the cost to premiums. This is the current funding system for Dirigo.

This year Dirigo is claiming $149 million in savings to the system, the highest amount ever, even though enrollment has dropped by thousands since its high point. The final decision on how much of this money Dirigo will receive will be made by the new superintendent of insurance, Mila Koffman. She has testified in favor of Dirigo in the past before our committee, so it could be a good year for Dirigo.

So why does Dirigo need the new taxes on beer, wine, soda and health care services? Because the SOP is a difficult, complex and contentious process. It is much easier to simply take the money and forget about proving anything.

Some 90,000 Maine voters signed the petition to put the people’ s veto on the ballot — a huge level of support. The pro-tax Dirigo proponents are fighting back with a propaganda onslaught about the number of people who could be “at risk of losing health care” if the Dirigo taxes are repealed. We first heard 20,000 from the Dirigo tax bill’ s sponsor, House Majority Leader Hannah Pingree, even though the program’ s actual enrollment is only around 12,300. For greater shock value, they then started to use 50,000. The most recent figure I’ ve heard is 58,000.

These latest numbers include everyone in Maine who buys health insurance in the individual market. Supposedly we would all be “at risk” because the Dirigo program saves the system so much money. In truth, Dirigo costs the system money. It is a tax on health care and we are all paying for it.

The claims about the successes of Dirigo Health, the amount of money saved and the number of people who benefit from Dirigo are preposterous. These are bold falsehoods that are breathtaking in their audacity. The bottom line is that the money necessary to run Dirigo and pay the six-figure salaries of Dirigo bureaucrats will continue rolling into the Dirigo offices in Augusta whether these new taxes take effect or not.

Rep. Jonathan McKane, R-Newcastle, represents Bristol, South Bristol, Damariscotta, Edgecomb, Newcastle and Monhegan. He may be reached through www.jonmckane.com.

SEE COMMENTS →

View stories by school

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business

Similar Articles

More in Sports