Bangor restaurateur Peter Geaghan offers health insurance to 10 of his employees through DirigoChoice.
But on Wednesday, the day after Maine’s voters resoundingly overturned the new beverage tax that would have helped fund the state’s health insurance program, Geaghan already was looking for other options to keep his workers healthy.
“My concern is the fear of the unknown,” the co-owner of Geaghan’s Pub said. “Is the funding just going to dry up and be nothing? I’m finding, shopping around, that there’re other plans out there. But the deductible is higher, and the coverage really isn’t as good.”
Geaghan joins many Mainers who are wondering what the future of Dirigo will be.
Tuesday’s Dirigo beverage tax repeal, which passed with 64 percent of the vote, means that the health insurance program will revert back to its current funding source. That source is the unpredictable and unpopular savings offset payment, which taxes insurers based on the state’s estimated cost savings from the insurance programs.
The new law was overturned after a more than $3.5 million campaign that was subsidized by out-of-state beverage companies. The law would have replaced the savings offset payment with a 1.8 percent surcharge on health insurance claims and the new excise tax on beer, wine, soda and other sugary beverages.
But now the savings offset payment method is in jeopardy, too.
The Maine State Chamber of Commerce filed a lawsuit two weeks ago that challenges the state’s $48.7 million 2007 savings offset payment, and Dirigo advocates are worried.
“If they are successful, there will be no funding,” Joe Ditre of the nonprofit group Maine Consumers for Affordable Health Care said recently. “This is a direct attack on the only remaining funding source.”
Kristine Ossenfort of the Maine State Chamber of Commerce argued that DirigoChoice warrants a closer look by the state.
“If it’s going to survive, it needs to be restructured,” she said. “If people are struggling with their own health insurance costs, taxing their own health insurance programs won’t make it more affordable for them. It will make it less affordable.”
One health policy expert said that DirigoChoice is very polarizing and that the repeal of the beverage tax may be a signal that it’s time to reassess the program’s efficacy.
“Dirigo had a fairly significant startup investment. … And some people are quick to point out that Dirigo was supposed to have many, many tens of thousands of people enrolled when it was first conceived,” said Gino Nalli of the Muskie School for Public Service at the University of Southern Maine. “My sense is that Dirigo will continue to limp along until a new administration will come in, in 2010.”
In fact, the DirigoChoice plan now provides health coverage to about 11,500 members. About 5,500 more Mainers are covered under the associated MaineCare Parent Expansion program.
Advocates of DirigoChoice said in a statement released late Tuesday night that though they were disappointed to revert back to the savings offset plan, they will work toward finding reliable funding for the program’s members.
“There is a lot of momentum in Maine to continue working on our problems with health coverage and especially keeping our kids healthy,” said the coalition members, who include Maine doctors and nurses. “We are excited about looking ahead, and we welcome the beverage companies to our conversation — we hope that instead of fighting us using $3.7 million they will now step up to the plate and be part of the solution instead of part of the problem.”
Many small-business owners opposed the beverage tax that Mainers rejected Tuesday, but not Geaghan.
“It wouldn’t have put me out of business,” he said of the tax. “The fact is, if we truly want to insure people or we truly want a better education system or a cleaner environment, it’s going to cost money, and you can’t just print more money.”
Geaghan said he was skeptical of the motives of the large beverage companies that gave millions to overturn the beverage tax — and added that although providing health insurance takes money, the alternative is costly, too.
“I don’t think they have my employee — the guy I look at every day — his best interest at heart,” the restaurateur said. “We treat our employees as best we can. It’s an investment for us.”