LePage seeks to pull the plug on Dirigo; supporters urge restraint

Posted Feb. 24, 2011, at 2:08 p.m.
Last modified Feb. 25, 2011, at 2:20 p.m.

Note: An earlier version of this story incorrectly reported the intent of  legislation being drafted by Rep. Sharon Treat, D-Hallowell. The corrected text is below.

The LePage administration has the Dirigo Health Agency in its cross hairs.

The agency is best known as the home of the controversial DirigoChoice subsidized health insurance program. It also administers several federally funded health coverage plans and a special section of MaineCare, and it houses the Maine Quality Forum, which gathers and analyzes health care quality data from Maine hospitals and medical practices.

Gov. Paul LePage was openly critical of the quasi-governmental Dirigo agency during his campaign for the Blaine House, and the head of his transition team predicted that “Dirigo will be Diri-gone” after LePage took office.

Now, in his proposed biennial budget, the governor calls for a graduated reduction of funding for the agency, effectively shuttering it and the programs it administers by the beginning of 2014. While weeks of budget wrangling lie ahead, anti-Dirigo sentiment among the Republican majority in the Legislature is strong, and the defunding of the agency seems likely.

“There is pretty strong consensus that Dirigo has not succeeded and that we need to move past it,” said Senate President Kevin Raye, R-Perry. “By almost every measure, it has fallen short.”

But Democrats and liberal advocacy groups aren’t letting Dirigo go down without a fight. Recently, a coalition of groups calling themselves Maine Voices for Coverage mailed to every Maine lawmaker a list of all 583 businesses that currently provide their employees with health care coverage through the agency.

The list includes employers from Madawaska to York and includes major workplaces such as MaineHealth — the parent corporation of Maine Medical Center — and the Fortune 500 UNUM corporation in Portland, as well as the Bear River Trading Post in Newry, Koob’s Garage in Oquossoc and Boynton Engraving in Spruce Head.

All told, the Dirigo Health Agency covers nearly 15,000 Mainers, according to the consumer group. In an accompanying letter, Maine Voices for Coverage urges lawmakers to be cautious in considering the effect of closing Dirigo on the communities they serve.

“Policy decisions regarding [the Dirigo Health Agency] should be based on facts, not stereotypes, anecdotes or ideology,” the letter says.

Policy Director Mitchell Stein of the nonprofit Consumers for Affordable Health Care says many legislative Republicans appear to be swayed by what he says are “anecdotal” reports of widespread abuse in MaineCare and other assistance programs. Some Republicans also believe Dirigo’s funding, which derives almost exclusively from an assessment on private insurance companies, has worsened business conditions in the state, he said. It is that assessment, or tax, that LePage is targeting in his budget.

But defunding Dirigo without providing realistic insurance alternatives for the individuals covered through its programs would be short-sighted, Stein said.

“You would hope there would be some forethought into the impact of reduced funding and how these people would be taken care of,” he said.

Many Democratic lawmakers defend the Dirigo Health Agency and related initiatives of the Baldacci administration as forward-thinking efforts to address simultaneously the issues of health care access, cost and quality. And Democrats argue that the Dirigo Health Agency is well-positioned to facilitate the rollout of the Affordable Care Act in Maine, despite ongoing Republican attempts to dismantle the national health reform before it can take full effect.

Rep. Sharon Treat, D-Hallowell, serves on the Insurance and Financial Services Committee and is among the early supporters of the Dirigo Health Agency. Treat says the agency has served a vital role, offering affordable insurance options to companies that want to provide coverage to their employees.

Republican insistence on closing the agency runs counter to the majority party’s pro-business platform, she said in an interview on Wednesday.

“I thought Maine was supposed to be ‘open for business,’” she said, referencing one of LePage’s campaign slogans. “But closing Dirigo will make it harder for small businesses to get health coverage.”

Treat sees the writing on the wall for Dirigo. But in keeping with the recommendations of a bipartisan legislative  committee that met all last summer to consider the rollout of the national health reform in Maine,  she is drafting legislation that would phase the agency out and establish a new quasi-public organization, with a new board, to administer the insurance exchange, a consumer clearing house for insurance information mandated by the Affordable Care Act. The new agency would also house the Maine Quality Forum.

Raye said Dirigo’s days are numbered, but Republicans have no intention of pulling the plug on the 15,000 Mainers currently insured through the agency.

“No one is looking to throw these people out of coverage,” he said. Although no specific alternatives have been identified, Raye said market-based reforms such as repealing insurance regulations are needed to stimulate competition and drive down the cost of insurance in Maine.

“It’s going to be an organized process,” he said. “We’ll be taking a broad, comprehensive look to make sure health care is affordable for Maine people, but it won’t be within the confines of Dirigo Health.”

As for the agency’s role in supporting elements of the Affordable Care Act, Raye said there is too much uncertainty about the federal law’s future to adopt policies based on its implementation.

Karynlee Harrington, executive director of the Dirigo Health Agency, said her staff and governing board are well aware of the rising tide of enthusiasm for torpedoing the agency and are looking at ways to deal with the graduated loss of revenue.

“I’m just happy they didn’t totally eliminate [funding] effective July 1, 2011,” she said, referring to the start of the new biennium.

“People can have their opinions as to whether Dirigo has been successful or not,” she said. “But operationally, this agency has been successful and efficient and we are well positioned to take on the work of developing the insurance exchange,” she said.

Harrington is optimistic that even with the budget cuts, the agency will continue to serve as a bridge to help Mainers maintain their health care coverage until 2014 when more affordable options will be available — assuming national health reform is not brought down as well.

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