February 23, 2010

State claims $79 million Dirigo savings

Kennebec Journal Staff

STAFF REPORT

Maine's Dirigo Health insurance program saved $78.9 million 2008-09, the state's bureau of insurance said Monday.

This is the largest year-to-year savings posted by the agency since its inception in 2003, according to Trish Riley, director of the Governor's Office of Health Policy and Finance. In total, she said, Dirigo has accounted for health care cost savings in Maine of $180 million.

"It got better each time," she said.

Monday's declaration of Dirigo savings from Insurance Superintendent Mila Kofman is cut into two parts: hospital cost savings of $67.3 million, and reduction in charity care of $11.3 million.

This will be the fourth and final assessment of savings from the controversial insurance program, as its basis -- the contentious funding formula known as the Savings Offset Payment -- was killed by lawmakers in 2009.

The SOP, as it was known, calculated the savings from Dirigo for insurance companies through several complex variables, and was the subject of regular appeals and legal battles that ended up costing the state more than $1 million.

Maine lawmakers replaced it with a flat 2.14 percent tax on paid insurance claims in June of 2009, following an unsuccessful referendum to base Dirigo funding on a combination of increased taxes on beer, wine and soft drinks.

The last Dirigo savings assessments was in September 2008 and totaled $48.7 million. Kofman was not available on Monday evening to comment on these figures.

Riley said the regular savings assessments will end under the new funding formula, but the savings from Dirigo will remain going forward, now that the program has moved to a "clean and predictable" funding source.

Almost 14,000 Mainers receive insurance through Dirigo programs -- either Dirigo Choice, a public/private arrangement with insurer Harvard Pilgrim Health Care, or a program benefiting parents of children that receive state assistance.

Administrators from Dirigo will appear before the Legislature's Appropriations Committee on Wednesday at 10 a.m.

In December, the agency told lawmakers it was planning to repay a $25 million loan it received from the state when it comes due June 30.

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