While legislation is being promised to block insurance companies from passing on a fee to fund the DirigoChoice insurance program, those covered through self-insured businesses or professional associations are anticipating paying millions to support the state-subsidized plan.

A survey of some of the state’s larger employers and self-insured plans shows Jackson Laboratories is anticipating a charge of at least $131,000; L.L. Bean, $500,000; and, the Maine Municipal Association, $1.3 to $1.7 million.

In all, the state plans to collect $43.7 million next year from insurance companies – the largest by far being Anthem – and self-insured plans to pay for the continuation of the DirigoChoice insurance program and to expand Medicaid to provide coverage to some of the state’s 135,000 uninsured. The money is supposed to represent savings in the system brought about by initiatives in the Dirigo Health legislation passed in 2003, including a reduction in bad debt and charity care.

The assessment, also known as the Savings Offset Payment, is being calculated as a percentage of paid claims.

The state of Maine, and by extension Maine taxpayers, funds one of the larger self-insured pools for state employees. There are 40,000 people insured through the Employees Health Insurance Program, including state employees, retirees and their families, according to statistics available from that office.

No estimates were available on how much it will cost for the state employee share of the Dirigo assessment, but the group that covers the state’s 55,000 teachers, families and retirees is estimating its share at $5 million.

“We don’t know at this point because the offset is being challenged by insurance companies,” said Dana Graham, the president of the Maine State Employees Union, which has 10,000 members in the plan along with their dependents.

The state picks up 100 percent of the cost of state employee health benefits – except for a recently added $200 to $400 deductible. The amount the state picks up for dependent care is negotiated and right now is at 60 percent, Graham said. When the contract is renegotiated, the goal is to have the state pick up the Dirigo assessment, at least in the next contract.

“That is our hope that it doesn’t affect us in the near term,” Graham said.

The Maine State Employees Union supports Dirigo and the assessment, Graham said, because 16 percent of the cost of health insurance in the state goes to cover bad debt and charity care for those who aren’t insured.

Attorney David Wakelin, representing the Maine Education Association Benefits Trusts, said teachers get their insurance through Anthem. Legislation is expected in this session to block insurance companies from passing on the Dirigo assessment, but Wakelin isn’t counting on it.

“If Anthem can’t pass this cost on…it’s like squeezing the balloon. It’s going to come out in some place. Somehow their cost of doing business will go up,” Wakelin said, and premiums will go up.”

“We are in favor of Dirigo. We just disagree with the way in which they funded it. They put it exactly on the wrong people,” Wakelin said, suggesting the tax should be put on “those that don’t supply coverage to their employees, not the ones that do.”

Wakelin and others have said that instead of the assessment on claims, the state could implement a payroll tax across the board to spread out the cost to everyone.

Gov. John Baldacci has threatened to push through legislation that would prohibit insurance companies from passing on the assessment to their policy holders, since insurance carriers are supposed to be seeing cost reductions in health care thanks to more people being insured under DirigoChoice and voluntary caps on profits made by the state’s hospitals.

Opponents argue those savings have yet to be realized and the assessment is nothing more than another tax.

In the case of self-insured businesses, there is no middle-man to absorb the cost, which means it will either be picked up by employers, employees or most likely both.

L.L. Bean, which currently pays 70 percent of the cost of its employees’ health care, expects the company’s share of the Dirigo assessment will be $500,000.

“The concept of the program is a good one, and it’s one that we agree with,” said John Oliver, vice president of public affairs for L.L. Bean and on the board of directors of the Maine State Chamber. The chamber, along with an alliance of health insurance companies, has sued the state over the way the Dirigo fee is being calculated.

“How it is calculated is very critical to the objectives of that program,” Oliver said. “If it’s a true savings offset and the money goes back into expanding it, we all win. If it’s not a true savings, what we end up doing is putting additional financial burdens on employers, who are voluntarily carrying health insurance.” That could make the cost of insurance even more expensive to employers and employees and therefore add to the ranks of uninsured, he said.

Stephen Gove, director of health trust services for the Maine Municipal Association, said his organization is anticipating between a $1.3 and $1.7 million assessment as a result of Dirigo. MMA offers a self-insured plan for 20,000 municipal, county and special government district employees and their dependents.

“We supported the Dirigo legislation. We did point out some concerns; the funding mechanism was one of them,” Gove said. “We were concerned about the inequity in the savings offset payment. Some employers that don’t provide health insurance may escape the payment,” he said, since the assessment is on paid insurance claims.

Oliver of L.L. Bean believes one of the casualties of the ongoing Dirigo debate is the relationship between government and business.

He said the debate has become “polarized” and “politicized.”

“We need to lower the volume on both sides and get more dialogue going and achieve its original goals, which is expanding the base of insured,” Oliver said.

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