AUGUSTA – Dirigo Health, the state-administered health insurance program initiated by Gov. John Baldacci, is likely to be a prime target after Gov.-elect Paul LePage takes office, says a member of LePage’s transition team.

A change wouldn’t be surprising, since the incoming Republican governor criticized the program during the campaign, but Baldacci officials say that eliminating the program wouldn’t save money in the state’s general fund.

The New York Times quoted Tarren Bragdon, a co-chair of LePage’s transition team, on Monday saying, “Dirigo will be Diri-gone.” The article containing the quote focused on proposed cuts by successful GOP gubernatorial candidates to help balance state budgets.

Bragdon said Monday that the quote was incomplete.

“What I said to (the reporter) was, Dirigo would be Diri-gone in its 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.

“This is one of many key issues that 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 has frequently criticized the Dirigo program.

Dirigo, signed into law in 2003 and implemented in 2005, aims to expand the availability of affordable health insurance to businesses and individuals. But the program has had funding problems 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 helped more than 32,000 Mainers get health insurance since it began, and has a current enrollment of about 14,000.

“There is no general fund money spent on Dirigo,” she said. “In fact, it covers 6,700 parents that would have been coming out of the general fund through MaineCare. 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 to limit rate increases.

“Like an exchange, it pools people and then bargains and it has proven itself very effective in bargaining,” she said.

Dirigo is about 50 percent funded by insurance companies through a complicated formula called a “savings offset payment” — a state calculation of the money saved from Dirigo covering unpaid hospital care that otherwise would be charged back to the insurance companies.

Bragdon argues that the savings offset payment, about $40 million a year, 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,” Riley said. “But we did, and the assessment was only as big as the savings we proved.

“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,” she said.

Other funding comes from member and employer payments, the federal government, and tobacco lawsuit settlement dollars.

The Dirigo program has been criticized as unaffordable, something Riley acknowledged, though she called the insurance a “richer product,” offering more complete coverage than other plans.

“It is more expensive, but its rate hikes are very competitive and as a result, lots of businesses are coming in now, some of them fairly big,” she said.

She said that when federal subsidies from the new national reform law are made available, Dirigo premiums would be more affordable.

National reform, plus federal grant money, has allowed Dirigo to establish a high-risk pool and offer vouchers to individuals to buy private insurance, according to Riley.

Since Congress enacted the federal health care reform law earlier this year, Riley said, Dirigo has been providing the framework for implementing the new legislation.

Though LePage also called for the repeal of the federal health care legislation during the campaign, Bragdon said the governor-elect has not discussed the issue with his transition team.

“I don’t think he’s prepared to make any sort of public statement on that, at all,” Bragdon said.

 

MaineToday Media State House Writer Rebekah Metzler can be contacted at 620-7016 or at: rmetzler@mainetoday.com