Maine High Court Backs Governor on Dirigo Assessments

June 4, 2007

The Maine supreme court has handed Gov. John Baldacci a victory on one of the most contentious elements of his Dirigo health initiative.

In a 5-1 ruling last week, the court sided with the Baldacci administration on assessments made to insurers based on savings created by the Dirigo program. Insurance Superintendent Alessandro Iuppa found that Dirigo produced $44 million in savings in the first year.

Writing for the majority, Chief Justice Leigh Saufley acknowledged that the statute was vague on “aggregate measurable cost savings” and gave deference to Iuppa’s “reasonable interpretation of an ambiguous statute.”

Justice Donald Alexander, the lone dissenter, said the insurance superintendent needed specific criteria for coming up with the disputed number.

“Reasonable people do differ, and differ geometrically, in guessing at the meaning of the ‘cost savings’ provision. And the statute provides no guidance as to how these differences may be resolved,” Alexander wrote.

Maine’s Dirigo Health Reform Act, which went into effect Jan. 1, 2005, is designed to contain health care costs and expand health coverage to the 130,000 Mainers who lack insurance.

The cost savings component to be passed on to insurers was supposed to be based on reduced charity care and bad debt under the Dirigo program.

But the Maine Association of Health Plans and two other groups sued over the $44 million figure, telling the Supreme Judicial Court that the Dirigo panel included additional categories of savings not envisioned by state lawmakers.

The state argued that the Dirigo Board and Iuppa had the expertise to interpret and apply the state law. The supreme court’s majority upheld a Superior Court judge’s ruling that gave deference to the Iuppa and the board.

Trish Riley, the governor’s top health adviser, said the cost savings concept that’s in dispute will likely be altered by the Legislature this session. But that still leaves two years’ worth of figures in dispute.

Differences in interpretation of the Legislature’s intention on the savings offset led the orginal proponents to propose a $2.7 million offset.

The five-member Dirigo Board appointed by Baldacci then came up with a figure of $136.8 million before it was reduced by Iuppa to $43.7 million.

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