PORTLAND -- To date, Governor Baldacci's Dirigo Health experiment has been funded by estimated "Savings Offset Payments" (SOPs) collected as a tax on health claims. These wildly fluctuating figures are based on the theoretical savings that hospitals and doctors have passed along to insurance companies and individuals because of Dirigo Health's coverage of previously uninsured patients and its so-called cost containment regulations. The hearings before the Insurance Superintendent on the estimated "Savings Offset Payment" happen today, September 9, 2008.
These latest optimistic "savings" for last year were estimated at $149 million by the Dirigo Health board of directors. New enrollment in Dirigo has been closed for a year due to the poor financials of the plan, and this has resulted in a Dirigo population that has declined to 12,000; with only an estimated 3,700 being previously uninsured for the year prior to Dirigo enrollment.
In 2006, with higher Dirigo enrollment, the SOP request was $78 million, which was reduced by 58 percent to $32.8 million by the Acting Insurance Superintendent, Eric Cioppa.
Ms. Mila Kofman, Maine's new Insurance Superintendent, was appointed by Governor Baldacci this spring. Ms. Kofman, a former college professor, has been an advocate for Dirigo and similar tax-funded health care schemes, and also served on the Consumers for Affordable Health Foundation's board until she was nominated for the Insurance Superintendent post in January, 2008.
"The challenge for Ms. Kofman will be to show impartiality as a judge in this case," notes Tarren Bragdon, chief executive officer of The Maine Heritage Policy Center. "She follows two previous Superintendents who displayed independence and integrity when making their SOP rulings. She is accountable to Maine citizens, and needs to move beyond her public advocacy role for Dirigo and honestly assess the situation. When the previous year's SOP was $32.8 million paid by Maine people with private health coverage, it's clearly impossible to justify an assessment as high as $80 million, the maximum allowed by law. Particularly as DirigoChoice enrollment has plummeted."
"To put this number in perspective, according the Bureau of Insurance, the total net income for Anthem and Aetna for their Maine business was $37.5 million last year - and they covered 129,000 Maine people," Bragdon continued. "The SOP could dictate a health claims tax of up to $80 million. Consider this: if Anthem and Aetna eliminated their profits, it would save only half as much as repealing the well-intentioned but failed experiment of Dirigo Health."
"I testified against the appointment of Ms. Kofman as Maine's Insurance Superintendent because of her lack of experience in insurance regulation and, frankly, because her background would indicate she would have a strong bias towards supporting the Dirigo experiment at any cost," admitted Bragdon. "I hope she proves these concerns wrong by slashing the $80 million and ultimately working to eliminate this oppressive tax on health claims paid by Maine people."
For more information, please contact Martin Sheehan, director of communications, via email at msheehan@mainepolicy.org, at The Maine Heritage Policy Center office at 207-321-2550 or via cell phone at 207-650-7335.
The Maine Heritage Policy Center is a 501 (c) 3 nonprofit, nonpartisan research and educational organization based in Portland, Maine. The Maine Heritage Policy Center formulates and promotes free market, conservative public policies in the areas of economic growth, fiscal matters, health care, education, and transparency - providing solutions that will benefit all the people of Maine. Contributions to The Maine Heritage Policy Center are tax deductible to the extent allowed by law.
