The state will reduce its subsidy to individuals who purchase Dirigo Health insurance – a move that could push some back into the ranks of the uninsured.

The Dirigo board of directors took a vote last month to stop subsidizing 100 percent of the premiums for individuals, including those just above the Medicaid-eligible poverty line.

New enrollees will be asked to pay 60 percent of the full premium starting in January and will receive subsidy on only 40 percent, similar to the deal now given to employers and employees in small companies and those that have set themselves up as sole proprietors.

The 1,866 individuals already enrolled in the program will get the subsidy on the full premium, based on their income, until they have to renew starting in April. Subsidies start at 80 percent for the lowest incomes.

“I’m personally not happy,” said Mary Henderson of Maine Equal Justice, at the time of the vote last month. Henderson, who sits on the Dirigo board and voted for the subsidy cut, said she worried some individuals would drop their insurance, but understood the financial necessity of the decision.

The state had made the decision to subsidize the full premium based on the recognition that individuals were often unemployed or sporadically employed and had no employer to share the insurance cost.

Dr. Robert McAfee, chairman of the Dirigo board, called the vote a “business decision.”

“If we find we disenfranchise a substantial number of people,” he said, the vote would have to be reconsidered.

Enrollment for individuals and sole proprietors was capped this year at 4,400, but will be open without caps in January of 2006. There already are 3,000 people on the waiting list, but it is unclear what effect the subsidy cut will have on the size of that list since it has not been publicized.

In addition to cutting back the subsidy, the Dirigo board also has agreed to put an asset test in place for all those who request a subsidy, from individuals to employees in small companies.

The asset test will not count a person’s primary residence, primary vehicle, or savings for college or retirement. It will count a second home and other investments, according to Trish Riley, head of the governor’s Office of Health Policy and Finance.

Riley said details of the asset test are still being worked out, but it is something critics of the Dirigo plan have called for to save money.

The two cost-saving measures are designed to stretch the Dirigo dollar until the state can start collecting assessments on private insurance companies and the self-insured to fund the program through 2006. Those assessments are supposed to recoup some of the dollars saved by Dirigo Health initiatives.

“These changes are clearly designed to reduce the number of people who are eligible for the subsidy,” said Sen. Richard Rosen, R-Hancock and Penboscot, who sits on the Health and Human Services Committee. “The focus has changed. Initially the objective was providing coverage to uninsured. This will make that less likely.”

Rosen had argued for a less rich plan to cover more people, both through Dirigo and in the Medicaid program for adults without children, which ran up against a federal spending cap in January and is taking no new members.

Rosen said that program, which was closed when it hit 24,900 enrollees, is being floated down to 18,000.

“That’s 7,000 people that had insurance who have lost it,” he said. Rosen questioned whether the state is taking into account those newly uninsured when it calculates the savings Dirigo has created in the state’s health care costs.

Riley agreed the subsidy cut could push some individuals out of the DirigoChoice insurance program.

“I’m afraid that could happen,” she said, but the DirigoChoice plan is still “fundamentally cheaper” than anything individuals can buy on the market for the same coverage because the state subsidizes the risk for Anthem – the carrier offering DirigoChoice in partnership with the state.

“In fairness it will allow us to bring more individuals on,” because there will be more money available to fund the system, she said.


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