Some businesses in Maine, including Wal-Mart, could get out of paying an assessment to help fund the Dirigo Health insurance program. That assessment is likely to be passed onto most Mainers through hikes in their insurance premiums. Bath Iron Works also was mentioned as possibly being exempt at a Health and Human Services Committee meeting last week, but the list has not been verified.
The news comes just a month before the Division of Insurance is scheduled to rule on exactly how the assessment will be calculated. Calls to BIW were not returned.
Under state insurance law, companies that self administer their own self-funded insurance plans or those that buy policies licensed in another state are not regulated by the Bureau of Insurance and therefore won’t have to pay the assessment. It also appears that federal employees would be exempt.
The majority of employers use insurance companies licensed in Maine or hire licensed third-party administrators to run their self-insurance plans and would pay.
“How is that fair?” asked Rep. Kevin Glynn, R-South Portland, who raised the issue at the Health and Human Services Committee meeting last Wednesday.
What’s at stake is an assessment that Glynn referred to as the Dirigo “tax” that could be as much as 4 percent of claims paid out by the state’s insurance companies and those that self insure. The assessment, which was provided for in law passed earlier this year, would pay for the state DirigoChoice subsidized insurance plan next year.
There’s is nothing that prevents that assessment, which at 4 percent would be around $48 million, from being passed onto consumers.
Insurance Superintendent Alessandro Iuppa will decide on the methodology for figuring that assessment based on proposals submitted by the Dirigo Health board of directors and others representing the insurance and businesses side of the table. The hearing starts Oct. 24 at the Statehouse with a decision due by the end of that week.
Under the rules, the assessment can be no more than the savings that have been brought about by Dirigo Health initiatives – most notably a voluntary cap on hospital profits and expenses. Also counted is the drop in bad debt and charity care thanks to the 8,000 and growing number of uninsured and under-insured people now enrolled in DirigoChoice and those added to the Medicaid rolls.
The Dirigo Health board estimates those savings at $137 million and the business side is at just under $36 million.
Kristine Ossenfort of the Maine State Chamber, who argued for the $36 million methodology, said the issue of who ultimately will pay the tax hasn’t been worked out and likely won’t be until the state attempts to collect it.
“The problem is you’re going to get different reactions from different companies. Those not subject to the savings offset payment are going to say ‘that’s great,'” she said. Others will say, “if I have to pay this, so should my competition.”
David Brenerman, an assistant vice president for Unum-Provident whose company would be subject to the tax, falls in the latter camp.
“We would prefer an assessment that was shared equally among all payers,” Brenerman said. “All employers are not created equal in the savings offset payment.”
Judith Shaw, deputy superintendent for the Division of Insurance, said she doesn’t know what companies would be exempt.
“Personally, I have no idea,” she said, when asked if companies like Wal-Mart were exempt as suggested by Rep. Glynn.
“We regulate third-party administrators. We don’t regulate the employers,” she said.
The same is true for those national companies that buy one policy for all their employers from an insurance carrier licensed outside of Maine.
“If they purchased that policy in Missouri, for example, they’re licensed to do business in the state of Missouri, and we would not regulate them,” she said.
In fact, the only time they hear of such companies is when Maine employees complain they are not getting the benefits mandated under Maine law and outlined in what’s know as a certificate of coverage for that out-of-state insurer.
“When we get complaints,” she said, is when the state knows those arrangements exist.
Send questions/comments to the editors.
