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Dirigo at the crossroads

Will Anthem get to have its cake and eat it too? Will Dirigo survive?
By LANCE TAPLEY  |  April 19, 2006

Joe Ditre, head of Consumers for Affordable Health Care in Augusta, is upset. He’s concerned that a deal to use state General Fund money to finance the Dirigo Health Plan may be in the last-minute legislative works. He says this would be “a taxpayer bailout of the insurance industry.”

Using money from income and sales taxes to fund Dirigo is not what he or Governor John Baldacci had in mind when three years ago they and other Democratic-Party-affiliated folks designed Dirigo, the state’s health-insurance program to cover the uninsured. Instead, they crafted a tax on health-insurance companies called the Savings Offset Payment, which is supposed to capture the savings Dirigo is bringing the companies.

“Before we use one nickel [of the General Fund], I want to see as much fat as possible squeezed out of the health-insurance and health-care systems,” says Ditre.

So as the session arrives at its frantic last hours, we have the strange scene of Ditre, Maine’s chief lobbyist for government-subsidized health insurance, arguing against direct governmental funding of health insurance.

And guess which people are arguing for direct governmental funding? The business community and many legislative Republicans. Oh, incidentally, there’s a tempting $100 million sitting in the state’s reserve account.

Capturing savings
Dirigo is supposed to bring savings to insurance companies through its health-industry cost-containment measures and through signing up people who otherwise would require free care, which is paid for by hospitals raising charges to the insured.

But the companies say the $44 million the state wants from them this year under this scheme—much of which would come from Anthem Blue Cross and Blue Shield, the 800-pound gorilla in the health-insurance market—is massively overstated, given that Dirigo has signed up few people so far. (The number depends on who’s doing the counting; the best answer is probably “several thousand” after a year and a half.) The companies are suing the state to avoid making this payment. If they have to make it, they intend to recoup it in the premiums they charge—meaning, ironically, health-insurance premiums will rise to fund a program the purpose of which is to make health insurance more affordable. Democratic legislators have introduced a bill, LD 1935, to block this pass-through. Some context here: Anthem's parent company, WellPoint, posted $2.5 billion in profits in 2005, according to CNN, and gave its CEO not just $1.25 million in salary, but also a $3.4-million bonus that year.

“Let’s take the Savings Offset Payment and put it aside,” says Dana Connors, head of the Maine State Chamber of Commerce, which has joined in suing the state. “Let’s come up with some temporary funding for this year”—out of the state’s General Fund—while a blue-ribbon commission figures out how to improve Dirigo.

And now the Republican minority on the Insurance and Financial Services Committee is proposing a $15-million-a-year appropriation to take the place of the Savings Offset Payment. Republican gubernatorial primary candidate Peter Mills, a senator who sits on the committee, has made direct funding of Dirigo part of his platform.

Although they have not publicly suggested using the General Fund for Dirigo, Democratic legislative leaders have said they might entertain some kind of deal.

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  Topics: News Features , U.S. Government, U.S. State Government, Politics,  More more >
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1 Comments / Add Comment

Katahdin

It is time the legislature stops giving Anthem huge subsidies. Deals are being made, and when the Chamber of Commerce is on board we are in trouble. Time for the high paid lobbyist to go home. We are the richest country in the world, we need to insure everyone in this country. WE rather spend it on the war. It is a matter of priorities. Dirigo is just a diversion not to talk about single payer health care. I will no longer support this failed policy, it is not the way to single payer health care as long as we deal with a for profit company like Anthem The Governor is listening to the wrong people again, he needs to start saying the words, single payer single payer. Katahdin
Posted: May 11 2006 at 9:26 PM
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Baldacci willing to deal

Governor John Baldacci says he is willing to deal on Dirigo — to discuss significant changes to the Dirigo Health Plan.

In a telephone interview, he says he agrees with Dana Connors’s proposal for a blue-ribbon commission to study how Dirigo’s operation and financing could be changed.

Baldacci even is open to the idea that General Fund money can be used in the long run to fund the program — but not in the short run, he says: “We started this on the original thesis there is enough money in the health care system to fund Dirigo,” and “we have to resolve the first year” that way.

He thinks it is only fair that Anthem and other insurance companies pay back what he says Dirigo has saved them—particularly because Anthem was given $20 million by Dirigo that, he says, it turns out the company doesn’t need because people covered by DirigoChoice do not have health risks greater than other health-insurance subscribers.

“We need to all sit down together to make sure we have the funding to get through April of next year,” the governor says — then see what the blue-ribbon commission comes up with: “For the long term I am willing to put everything on the table.” He says he is now working with Democratic legislative leadership to settle the outstanding issues around Dirigo.

He finds Republicans hypocritical, however, when they talk about immediately financing Dirigo from the General Fund: “One minute they’re talking about how we can’t do anything about highways and bridges because we don’t have the funds, but when we’ve built up a little reserve they want to spend it.”

He’s open to alternative approaches for Dirigo in matters other than funding. One possibility, he says, is that Maine can learn from the Massachusetts law—recently passed with great national fanfare — that, like Dirigo, has covering the uninsured as its chief goal. Since it requires all people in the state to have health insurance—low-income people would have their premiums subsidized — he calls it a “pay to play” system.

He recognizes that “we need to do more” to get more people signed up with Dirigo: “Nobody’s ever done this before,” he says of the goal of insuring all of Maine’s uninsured.

He also feels strongly that, instead of letting Anthem Blue Cross and Blue Shield continue to market DirigoChoice health insurance, the Legislature should pass LD 1845, the bill to let the state do it directly — or perhaps in collaboration with other insurance companies like State Farm insurance, he suggests, that don’t have competing health-insurance products.

“They are not the most enthusiastic sellers,” he says of Anthem. “I don’t think they want the competition.”

He also supports LD 1935, the bill to prevent insurance companies from passing through on insurance premiums the state’s Savings Offset Plan assessment to support Dirigo. “There cannot be an additional assessment on people,” he says.

Baldacci appears to welcome Dirigo as a campaign issue: “We have to make sure health care is front and center. Additional health care is an important issue.”

_LT

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