Private insurers and the Maine State Chamber of Commerce filed suits Monday in Superior Court to stop the state from charging the full $43.7 million fee to expand Medicaid and keep the Dirigo Health subsidized insurance program going in 2006.
The suits, filed separately by the Maine Association of Health Plans and the chamber, claim the state’s Bureau of Insurance made a mistake in its calculation of what justifies the fee.
That fee, being called a savings offset payment, will be charged to private insurance companies and businesses that self-insure, and is essential to keep the DirigoChoice subsidized insurance program alive in 2006. It also will be used to expand Medicaid to 10,000 parents earning up to 200 percent of poverty or $38,700 for a family of four.
“There’s no question that bad debt and charity care were properly included,” as savings resulting from more people being insured under Dirigo, said Kristine Ossenfort of the Maine State Chamber. The rest, however, can’t be attributed to Dirigo Health initiatives, she said.
Under that argument, the state could charge just $2.7 million in savings attributed to insuring the uninsured versus the $43.7 million it plans to assess after that amount was approved by the Bureau of Insurance at the end of October.
Insurance Commissioner Alessandro Iuppa not only included a reduction of bad debt and charity care in his calculations, but also allowed $33.7 million in savings from voluntary caps on hospital spending and profits and $7.3 million because of more timely Medicaid payments to doctors and hospitals.
Bills for the assessment, which opponents are calling the Dirigo tax, will go out at the end of March to cover the first quarter of 2006. Anthem, the state’s largest insurer, has said it will pass the assessment onto consumers through higher premium charges.
“The tax on health insurance carriers is largely going to be borne by employers and consumers,” Ossenfort said, adding that is clearly the case for the state’s self-insured businesses. “If carriers don’t see the savings or the savings are not accurately measured, they’re not going to have a choice but to pass it through.”
The court appeal is just the start of what promises to be a contentious new year for the fledgling DirigoChoice program, which now covers about 7,300 people.
Democratic legislators stand ready to introduce legislation this coming session that would block the fee from being passed on via the premium, but it is unclear how it would affect the state’s self-insured businesses. Governor John Baldacci has said he is in support of such legislation. Republican gubernatorial candidate, Sen. Peter Mills, has promised to make the Dirigo program part of the debate in his race for governor.
Trish Riley, head of the governor’s Office of Health Policy and Finance, said Tuesday morning, “It’s disappointing, but not surprising,” that the appeals were filed.
The appeal was anticipated by the Dirigo board of directors last week when it voted to assess the full amount versus a smaller sum, saying there was no way to appease Dirigo opponents.
Both Ossenfort and Katherine Pelletreau of the Maine Association of Health Plans agreed the smaller amount being considered by the Dirigo board of directors – $31.3 million – and its decision to go with the full assessment made little difference in their decision to appeal.
“We were strongly considering an appeal even before that,” Pelletreau said Monday.
“What it really boils down to is we’re appealing to challenge the method. It’s arbitrary and it doesn’t reflect real savings in the system, savings directly attributable to the operations of the Dirigo health program,” she said.
Her group too concedes that reductions in bad debt and charity care are directly tied to Dirigo, but questions whether the $2.7 million in savings attributed to it are too high.
The Maine Automobile Dealers Association and Bankers Health Trust also were expected to file an appeal.
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