Funding Dirigo

Posted April 13, 2009, at 6:52 p.m.

The repeal last fall of a beer and soda tax meant to fund the Dirigo Health program left the initiative without a stable funding source. A legislative committee today will hear proposals to fund the program through an assessment on health insurance claims and the creation of a system that segregates those most reliant on health care from those who are younger and healthier. The 2 percent assessment on insurance claims, which inevitably will be called the Dirigo Tax, is the best solution, although it breaks the important connection between Dirigo’s initiatives to improve health care and reduce costs and devoting that money to extending health insurance to more people.

Dirigo has been funded by a so-called savings offset payment. The SOP is a calculation of the health care savings resulting from Dirigo reforms, which include quality improvements and cost reductions. The savings are used primarily to extend health care policies to those without insurance.

Last year, the Dirigo board said the SOP was $149.6 million; the superintendent of insurance reduced it to $48.7 million, still important savings.

From the beginning, the SOP has been attacked. The Maine State Chamber of Commerce and Anthem Blue Cross, which was the Dirigo insurer until 2007, filed numerous legal challenges to the SOP. Although the payment has been upheld by the courts, calculating and defending the SOP costs the state between $3 million and $5 million a year.

That’s why lawmakers last year looked for new ways to fund Dirigo and settled on the tax on soda, beer and wine. In addition, a 1.8 percent surcharge was to be assessed on all insurance claims. This funding system was repealed through a people’s veto in November.

Now, lawmakers are looking for another way to fund Dirigo. The Legislature’s Insurance and Financial Services Committee is scheduled to hold public hearings on two options today. LD 1206 calls for a high risk pool with insurers paying an assessment of up to $10 per covered person per month to support the costs of the high-risk pool and Dirigo Health. Two other bills, LD 1005 and LD 1264, would put a 2.14 percent assessment on paid health insurance claims to support Dirigo. LD 1005 would prohibit insurers from passing this charge onto their customers.

Although not an immediate funding solution, a report released Monday highlights other possibilities. The report, by the Advisory Council on Health Systems Development, found, not surprisingly, that Maine has extremely high health care costs, on a per-person basis, in large part because of chronic illnesses such as heart disease and diabetes. It also found that health care costs vary widely from provider to provider and that overuse of emergency rooms adds to Maine’s high costs.

Addressing these cost drivers, by encouraging more healthful lifestyles, visits to doctors’ offices rather than the ER and using incentives to encourage patients to go to providers with lower costs and good outcomes will help lower costs in the long run.

In the shorter term, finding the least contentious way to fund Dirigo remains a priority.

SEE COMMENTS →

ADVERTISEMENT | Grow your business
ADVERTISEMENT | Grow your business

Similar Articles

More in Opinion