Democratic leaders in the Legislature are considering a counter-offer to the business community’s proposal to get rid of the so-called Dirigo tax to fund the state’s subsidized insurance program for the poor, while advocacy groups are calling for an additional assessment on insurance company profits and high-paid hospital executives.
Sen. Nancy Sullivan, D-York County, chairman of the Insurance and Financial Services Committee, said Democratic leaders met Monday to consider a “counter-offer” to a proposal from the Maine State Chamber of Commerce, the Maine Hospital Association and a consortium of insurance companies to get rid of the $43.7 million assessment to fund the DirigoChoice insurance program through 2006.
Her committee’s review of a bill backed by Gov. John Baldacci to prevent that assessment on insurance companies and the self-insured from being passed onto consumers was postponed as a result of the upper-level discussions.
The committee review already was delayed when Democratic leaders earlier this month asked parties involved in the Dirigo insurance plan to come up with ways to improve it.
That request sparked a series of proposals that continue to pit liberal consumer advocates against the hospital, insurance and business establishment. Advocates not only want to continue the Dirigo assessment, but raise additional fees as well.
Consumers for Affordable Health Care is calling on the state to put an excess profits tax on insurance companies, saying it could raise more than $9 million to expand health-care coverage in the state. Maine Peoples Alliance wants to tax hospitals on the salaries they pay to their top executives if they exceed five times that of the lowest paid full-time employee. The group says the tax would bring in more than $1 million, at a minimum.
The two most lucrative targets of those assessments are Anthem, with net profits after taxes in 2004 of 2.4 percent or $19.5 million, and the president of Maine Medical Center, who made $972,052 in 2003, according to figures given in the proposals.
Two of the state’s labor unions also have weighed in, taking the chance to support the so-called fair-share initiatives nationwide calling for big-box stores to either provide health insurance for their employees or pay a fee into the state’s Medicaid fund.
Sullivan said she didn’t know what the counter-offer from Democratic leadership will entail. Those interested in the negotiations speculated the administration will ask insurers to pick up part, but not all, of the proposed $43.7 million assessment – known as the Dirigo savings offset payment – and not pass it on in the form of rate hikes. That could be where the deal falls apart.
Insurance companies have been adamant about their inability to absorb the cost, saying it would make it unprofitable for them to continue to do business in Maine. Their proposal, jointly offered with the hospitals and Maine chamber, would be to accept an assessment of just $2.7 million or the estimated amount saved in bad debt and charity care thanks to Dirigo insuring more than 7,000 people last year. They would still want to pass that assessment onto customers.
The bulk of the money would come from administrative savings in the state agency that oversees DirigoChoice and by not using the assessment to fund an $11 million expansion of the Medicaid program. If the administration wants to expand coverage, the groups say, it should ask taxpayers to pay for it.
Anthem, which administers DirigoChoice for the state, also would forego a state-funded safety net of close to $11 million this year, designed to protect the company should those entering the subsidized program turn out to be sicker than expected. That money, however, was always supposed to revert back to the state if it isn’t needed by year-end, and $7.5 million was returned for 2005.
Republicans, meanwhile, say the key to affordable insurance is eliminating mandated coverage and having more options in the private market.
At a press conference last week, they proposed getting rid of Maine’s community rating and guaranteed issue rules and allowing insurance companies to set premiums based on a person’s current or previous health conditions.
They also would set up a high-risk pool to cover those with pre-existing and chronic illnesses, who could be deemed “uninsurable” by insurance companies because of their high risk. It would take the most expensive people out of the general system, making rates lower for the rest of those enrolled.
Republicans also would like to see a tax break on Health Savings Accounts, similar to the federal tax law, to encourage people to save for their own health needs, using a high-deductible, low-premium insurance plan for catastrophic coverage.
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