Parties Discussing Refinancing of Maine’s Dirigo Health

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Facing three conflicting committee recommendations, Baldacci administration officials, health industry, business and consumer representatives met with lawmakers once on Tuesday and planned to meet again to discuss redirecting and refinancing the Dirigo Health program.

A key question is how to provide funding for the program prospectively.

“I don’t think anyone’s got their feet set in concrete,” said Rep. John Brautigam, D-Falmouth, the House chairman of the divided Insurance and Financial Services Committee.

As part of a move toward universal health insurance coverage, Dirigo subsidies have been supported by assessments on insurers meant to be offset in part by cost savings. A month ago, Gov. John Baldacci put forth a new plan.

It envisioned a one-year continuation of savings offset payments before a conversion to a surcharge placed on hospital bills. Additionally, a tax on insurance plans would be extended to health maintenance organizations.

Finally, the plan called for a “shared responsibility” system: By July 1, 2008, employers who do not provide health coverage would have to pay a fee, while by Jan. 1, 2009, individuals would be required to have coverage or similarly be forced to pay into the program.

The Insurance and Financial Services panel, however, split over a number of elements.

Brautigam and other Democratic House members would require the Governor’s Office of Health Policy and Finance, in conjunction with the Labor Department, to study the impact of individual and employer mandates.

They would also repeal the savings offset payment, establish a 1.8 percent surcharge on hospital bills and increase the cigarette tax by 75 cents.

A separate proposal put forth by the committee’s two Democratic senators, Chairwoman Nancy Sullivan of Biddeford and Peter Bowman of Kittery, would also repeal the savings offset payment, establish a 1 percent assessment on the gross premiums of health insurance carriers, increase a tax on the net operating revenue of hospitals and create an income tax check-off directing contributions to Dirigo.

A Republican alternative also features a savings offset payment repeal.

“The good news is, there is a lot of overlap between them,” said Democratic Rep. Sharon Treat of Farmingdale, another panelist.

Baldacci’s budget proposal to raise the cigarette tax by a $1 ran into widespread legislative opposition and was subsequently scrapped.

Dirigo has been dogged by a slower than anticipated pace of enrolling participants, and its controversial financing mechanism spawned a protracted court fight.

On May 31, in a 5-1 ruling, the Maine supreme court sided with the Baldacci administration in upholding the savings offset payments.