Dirigo Health checkup time
As representatives of Dirigo Health, insurance companies and state business groups wrangled this fall over how much health care savings the state program has produced, businesses and their employers have continued to pay high premiums.
It appears those premiums will only increase in the near future. Anthem is eyeing a 20 percent rate increase for next year. And, insurers appear prepared to do what the Dirigo Health legislation allows them to do: pass on the cost of a new fee created by the program to consumers.
It’s time for a reality check on what this program has been able to accomplish: so far, very little. That’s not say Dirigo Health was a bad idea or a failed program. It’s to say that the governor and supporters of the program need to recognize that if this program is ever going to accomplish what it was created to do, it’s going to require more health care reform.
Gov. John Baldacci created the program to insure Maine’s uninsured. His attempt to tackle an extremely complex problem is commendable.
However, the program is nowhere near reaching its goal, and it’s showing no signs it will reach it anytime soon. What it is showing signs of is putting more of a financial burden on businesses and employees that are already paying too much for health care coverage.
The news hasn’t been too good recently for Dirigo. A couple of weeks ago, the state admitted that the number of people enrolled in DirigoChoice had been inadvertently inflated. Instead of 8,300, the program has only 7,300 people enrolled.
In addition to the small number of enrollees, most of the people in the program already had insurance before they had Dirigo. Trish Riley, the head of the governor’s Office of Health Policy and Finance, has said that only 1,000 to 2,000 of those enrolled in the program didn’t have insurance before they had Dirigo.
The number of enrollees isn’t the only thing that’s been shrinking for Dirigo. The estimated health care savings that the legislation has created also appears to be much smaller than supporters of the program originally estimated.
The Dirigo Health agency originally estimated the savings at $137 million. However, the superintendent of the state’s Bureau of Insurance, Alessandro Iuppa, recently set the savings at $43.7 million.
That ruling came after some embarrassing testimony, in which a state analyst admitted mistakes had been made in the state’s calculations. At one point, the analyst admitted the state’s calculations for one hospital were off by more than $6 million. “We definitely rushed through this,” Nancy Kane, a professor at the Harvard School of Public Health, testified at a hearing before the state’s Bureau of Insurance.
“We barely had time to get a spreadsheet together,” said Kane.
That’s particularly disturbing considering how complicated these calculations must be to make. After all, these aren’t actual savings. They’re avoided costs, which are always speculative.
Now the state wants to use those estimated savings to charge a fee to insurers – what the state refers to as a “savings offset payment” – which will be passed on to rate payers. The fee will help keep the program going next year.
That means this program might only add to what is already one of the biggest expenses for businesses and employees.
We support trying to find a way to insure those who don’t have health care coverage now. Insuring those people is good for the entire health care system, and, thereby, everyone who pays into it. But those of us paying for our insurance now can’t afford to pay more for marginal gains.
The state might need to re-evaluate some of regulations the governor backed off on to gain support for the program, or the state might need to re-evaluate its entire approach to solving this problem. Either way, the state needs to take a hard look at how well Dirigo Health is working.
If it doesn’t, it threatens to become, at best, a political liability for Baldacci and, at worst, a financial boondoggle for the state.
Brendan Moran, editor
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