Maine Close to Approving Dirigo Self-Insurance Venture

By | May 29, 2007

Despite arguments that the state should keep out of a business where only private enterprise belongs, the Maine Senate gave its blessing last week to a proposal to allow the state to venture further into health insurance.

A bill to authorize the state’s Dirigo Health program to self-insure was approved by an 18-16 vote. Two days earlier, the House also voted in favor of the bill, which has the support of Gov. John Baldacci.

The proposal faces further House and Senate votes.

The proposal would allow an expanded Dirigo Health board to provide health coverage through a self-administered plan. The board could enter agreements for purchasing and administrative functions only. But risk pools and reserves of Dirigo Health’s self-administered plan and any public purchaser may not be commingled.

More simply summarized by the bill’s sponsor, Rep. Jill Conover, D-Oakland, the bill gets Anthem Blue Cross Blue Shield, which now has a contract to design and market the state program, “out of the driver’s seat.”

The bill “puts another option on the table” to make health insurance available to tens of thousands of Mainers who lack coverage, Sen. John Martin, D-Eagle Lake, said during last Thursday’s debate. “It seems to me that the time has come to deal with reality.”

But other senators warned that the proposal exposes the state — and thus taxpayers — to financial risks and lawsuits, and said the state does not belong in the insurance business.

“In a world of free enterprise, we try to set up a level playing field,” said Sen. Lois Snowe-Mello, R-Mechanic Falls. “This changes it. This gives Dirigo the advantage.”

Sen. Peter Mills, R-Cornville, warned that the self-insured program would be “incompetently run” by people who lack knowledge and background in the insurance business. Mills and others also said the program’s costs and risks would be financially underpinned by public funds.

But Martin, who disclosed during the debate that he is an Anthem agent, said the Legislature has taken similar steps to stimulate competition in the past with success.

He pointed to Maine Employers Mutual Insurance Co., which was created by the Legislature in the early 1990s in response to a workers compensation insurance crisis in which premiums were out of reach for many businesses.

MEMIC’s entry into the market brought numerous other insurers into the state, Martin said. Mills countered that MEMIC’s costs are not borne by public dollars.

Martin also noted that the state has a self-insurance plan to cover state employees.

The self-insurance bill is one of several addressing the Dirigo program, which was created in 2003 to move the state toward universal health but has since failed to meet enrollment expectations and has undergone harsh criticism by Republicans.

A package of Dirigo changes submitted by Baldacci, which includes milestones for mandated coverage for individuals and businesses, remains in committee.

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