November 9, 2010

LePage likely to target Dirigo

Health insurance plan on life support

By Rebekah Metzler
MaineToday Media State House Writer

AUGUSTA -- Dirigo Health, the state-administered health insurance program initiated by Gov. John Baldacci, is likely to be targeted after Gov.-elect Paul LePage takes office, according to member of LePage's transition team.

Tarren Bragdon, chief executive officer of the Maine Heritage Policy Center, speaks in Waterville at the Hampton Inn. Bragdon is also co-chair of Gov.-elect Paul LePage's transition team.

File photo by David Leaming

The move is unsurprising, as the incoming Republican governor criticized the program on the campaign trail, but Baldacci officials say eliminating the controversial program will not result in general fund savings.

The New York Times on Monday quoted Tarren Bragon, a co-chair of LePage's transition team, saying "Dirigo will be Diri-gone." The article containing the quote was focused on proposed state-level cuts from successful GOP gubernatorial candidates to help balance state budgets.

Bragdon, on Monday, said the quote was incomplete.

"What I said to (the reporter) was, Dirigo would be Diri-gone in it's current form, as the governor-elect looks at how we can expand health insurance choices to small businesses so that they can affordably add jobs," he said.

"Certainly the governor-elect was clear during the whole campaign, but this is one of many key issues that really will dominate the next session, as states grapple with implementation issues related to federal health care reform, which in and of itself is a huge moving target with the new Congress," said Bragdon, who is on paid leave from his job as chief executive officer of the Maine Heritage Policy Center, a right-leaning think tank that's frequently criticized the insurance program.

Dirigo, passed in 2003 and implemented in 2005, aimed to expand the availability of affordable health insurance to businesses and individuals, but the program was plagued by funding woes and failed to live up to its promise.

"The governor-elect is really very focused on how do we increase the number of jobs in Maine, part of that is expanding the number of health insurance choices that are available to small businesses, but that's just a small piece of it," Bragdon said.

Trish Riley, director of Baldacci's Office of Health Policy and Finance, said Dirigo has been successful at helping more than 32,000 Mainers obtain health insurance since it began and boasts a current enrollment of about 14,000.

"There is no general fund money spent on Dirigo," she said. "In fact, it covers 6,700 hundred parents that would have been coming out of the general fund through MaineCare. But you would either cut 6,700 people off Medicaid or the general fund would have to come up with the roughly $6 million, if you eliminate Dirigo."

Riley said the program, a public-private partnership, has brought some competition to Maine's individual insurance market and helped keep premium rate hikes down.

"It's now 16 percent of (Maine's) individual market," she said. "Like an exchange, it pools people and then bargains and it has proven itself very effective in bargaining. We had a zero percent premium increase for individuals and a 2 percent increase for small businesses, compared to double-digit premium increases for non-Dirigo premiums."

Dirigo is about 50 percent funded by private insurance companies through a complicated formula called a savings offset payment, which is a state calculation of the money saved rom Dirigo covering unpaid hospital care that otherwise would have been charged back to the insurance company.

Though this is not general fund revenue, Bragdon argues the payment, about $40 million annually, is passed on to consumers.

"The savings offset payment was contentious because you had to prove the savings in the system before you could assess the fee. But we did, and the assessment was only as big as the savings we proved," Riley said. "What the insurance companies should have done was say, we've seen the savings and we won't pass anything through, but of course, they did."

(Continued on page 2)

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