Dirigo Will Save Maine Health System $33 Million, State Estimates

September 19, 2007

The state’s Dirigo Health program will save the Maine health care system $32.8 million in its third year of operation, the Maine superintendent of insurance has ruled.

In a 23-page report, Bureau of Insurance Acting Superintendent Eric Cioppa found that the Dirigo program would provide $25 million in hospital savings, $6.3 million in uninsured and underinsured initiatives, and another $1.5 million in health care provider fee savings.

The total is less than half the $78.1 million in savings that was calculated by the Dirigo board of directors in July.

The superintendent last year calculated that there were $34.2 million in savings in Dirigo’s second year of operation. In 2005, the savings were pegged at $43.7 million.

The calculation is the basis for the controversial “savings offset payment,” or SOP. That payment — an assessment made on health insurance companies based on savings created by the Dirigo program — is the current funding mechanism for Dirigo’s insurance subsidies.

Although Cioppa’s calculation was less than half the savings estimated by the Dirigo board, the program is clearly saving money, said Karynlee Harrington, executive director of the Dirigo Health Agency.

“We firmly believe the savings determined by the board are valid, and while we disagree with the superintendent’s decision we can not overlook that $32.8 million is a very real savings and further proof that Dirigo is working,” Harrington said.

Katherine Pelletreau, executive director of the Maine Association of Health Plans, which represents Maine’s four health insurers, called Cioppa’s findings “reasonable.”

“I think he’s done a very credible job of evaluating all the evidence before him,” she said.

But insurers still dislike the SOP, which she said undermines the entire Dirigo program.

Dirigo, she said, should be funded through the state’s General Fund rather than put on the backs of insurers.

Dirigo Health was created by the Legislature in 2003 to curb health care costs, broaden access to coverage for thousands of Mainers who lack health insurance and promote health care quality.

About 15,000 subscribers are enrolled in the program’s DirigoChoice insurance product.

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