The bipartisan support that created the Dirigo Health insurance program two years ago has crumbled, with Republicans who co-sponsored the enabling legislation now calling for the state to consider pulling the plug.

Democrats say Republicans have simply turned on the once popular program to get votes in the 2006 election.

Sen. Karl Turner, R-Cumberland, and Sen. Peter Mills, R-Somerset, were both strong supporters of the legislation that created Dirigo Health, which was signed into law two years ago this week.

“I was an early supporter of Dirigo and a member of the joint select committee,” that created the enabling legislation, Turner said in debate on the Senate floor last Friday. Given the cost of the program and the amount of state subsidy it will cost to keep it going, he said, “do we continue to invest or cut our losses?”

“I don’t think Dirigo is a model we can afford to sustain here as a small state,” Turner said.

Turner spoke after Mills – whose name has been floated as candidate for governor – launched a blistering attack on the health insurance program.

Mills, who was singled out for thanks by Gov. John Baldacci when he signed the bill on June 18, 2003, said the subsidies needed to keep Dirigo alive would make it politically and economically unsustainable.

“In order to survive it needs 40 million in public dollars annually to subsidize a product that is not otherwise affordable,” Mills said. “We really need an independent assessment on whether we should continue with this experiment or cap enrollment and cut our losses.”

He predicted taxpayers will soon be saying, “Gee, there is another 700,000 of us who can’t pay our health bill either,” referring to those in the state who are not covered by Medicaid or Dirigo. About one-fifth of the state is in Medicaid and another 7,000 people are expected to be enrolled in Dirigo by the end of this month.

“Can we take the heat that will be felt when three-quarters of the state of Maine winds up being assessed a tax to benefit a few?” Mills asked his fellow senators.

Dirigo subsidies include a tax or assessment on paid claims for those covered with private health insurance and a $10 million to $12 million state-subsidized safety net for Anthem, which is handling the Dirigo insurance for the state. That safety net is to ensure Anthem doesn’t lose money on Dirigo because the population it covers tends to be sicker than the norm. Without that safety net the insurance company would charge higher premiums up front. Any money not used will revert back to the state.

Sen. John Martin, D-Aroostook, said Dirigo, which passed with the support of two-thirds of the Legislature, was being used “in the race for governor, in legislative campaigns. There’s just too many people who want to see it fail,” for their political gain.

“We have to get it out of politics,” Martin said, if the program is going to survive.

Dirigo came up for debate because of a contentious bill making its way through the Legislature that outlines how the state will assess what it is calling a savings offset payment. It is supposed to capture savings in health care expenses brought about by the Dirigo Health legislation.

The legislation allowed for collecting up to 4 percent of premiums from private insurance companies, but didn’t outline how to collect the money from self-insured companies, which make up about half of the insurance plans in the state. Also not clear from the original legislation was how to determine the amount of savings.

Those savings are expected to come from the hospitals agreeing to voluntary expense caps; limits on new health care related construction; and, a reduction in bad debt and charity care as more people get insured under the Dirigo Health insurance plan.

The paid claims pool is in the hundreds of millions of dollars and the proposed offset payment or tax could total more than $40 million. There is nothing to prevent that tax from being passed onto consumers.

The clarifying legislation has changed premiums to paid claims and puts the ultimate determination of how to calculate the savings with the Dirigo board of directors. An amendment to the bill that is expected to be attached in the House would get the Bureau of Insurance involved in the process – a change pushed by the head of the Maine State Chamber of Commerce, Dana Connors.

Connors said he was concerned the determination of the amount of the claims assessment would be in the hands of the Dirigo board, “and I’m a member of it.”

“The process has to be as transparent as possible,” Connors said, and is better handled by the Bureau of Insurance, which has the expertise.

The bill, which passed the Senate in an 18-15 vote, is expected to squeak by in the House along party lines. If it passes, the assessment on paid claims would start next April.

Rep. Kevin Glynn, R-South Portland, who also was on the Joint Standing Committee on Health Care Reform that created Dirigo, is leading the charge to revamp the system in the House.

The debate is hurting the program, according to Dirigo Health Agency Director Karynlee Harrington. “I’m very concerned about bringing in new membership,” with all the criticism being reported in the media, Harrington said. “It’s muddying the waters even more, and the whole process has impacted enrollment,” she said, because people wonder if the program is going to survive.

Sen. Arthur Mayo, D-Sagadahoc, who also was on the Joint Standing Committee on Health Reform – then as a registered Republican – said critics were “seeing the glass being half empty.”

“I think that Dirigo still has a positive and vital role…I do not think it’s going to disappear.”


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