AUGUSTA — Some small businesses in Maine may drop health insurance plans when DirigoHealth is replaced by the insurance exchanges outlined in the federal health reform law, a top Baldacci administration official said Monday.

Trish Riley, director of the Governor’s Office of Health Policy and Finance, told a legislative committee that the exchanges would provide subsidies only to individuals, unlike Dirigo, which provides subsidies to employers that offer coverage.

In response to the change, some employers may drop health plans, give their workers raises and urge them to buy their own insurance, Riley said – and the loss of company contributions toward workers’ coverage would increase the demand for subsidies.

Workers could use their federal subsidies to buy insurance through their employer’s plans, or they could get their own policy through an exchange – essentially a large insurance pool.

About 500 small companies in Maine now offer health care coverage through Dirigo, she said.

Riley, who led the effort to create Dirigo seven years ago, will leave her post when Gov.-elect Paul LePage takes office in January.

Her comments on Dirigo came as she spoke for the last time to the Legislature’s Select Committee on Health Care Reform. She said federal reform will boost access to health care, with about a half-million Maine residents under the age of 65 potentially eligible for insurance.

Republicans have been critical of Dirigo, saying it has been ineffective and too costly. Democrats on the committee said the new federal law will supplant the controversial state program.

It’s clear that Dirigo will cease to exist as it becomes “morphed” into the new federal program, said Sen. Joseph Brannigan, D-Portland, the committee’s Senate chair.

“Dirigo is gone,” he said.

While some Republicans warned that portions of the federal health care reform law may be overturned in Congress, the committee unanimously agreed that Maine should prepare to implement it.

According to the committee’s draft report, Maine should be operating its own health insurance exchange by 2014. The committee also believes that Maine could eventually create a regional exchange with other New England states.

Dirigo, which provides insurance to about 15,000 people, is funded by a 2.14 percent assessment on claims paid by insurance companies.

The assessment stands to be eliminated when the exchanges are created. Riley told the committee, however, that lawmakers should consider retaining a portion of the assessment to pay for health care initiatives that aren’t funded by the federal program, such as the health insurance subsidy for small companies and the Maine Quality Forum, a division of Dirigo that advocates for improving the quality of health care.

Republicans on the committee said very little about their party’s legislative agenda for health care.

Sen. Earle McCormick, R-West Gardiner, said it’s uncertain whether LePage will follow other Republican governors and sue to block implementation of the federal health reform law – something LePage supported during the campaign.

Also uncertain, McCormick said, is whether Congress will strip the law of funding to stop its progress.

 

MaineToday Media State House Writer Tom Bell can be contacted at 699-6261 or: [email protected]