Dirigo Health will not be supported by a beverage tax, but the question now to solve, after Mainers overwhelmingly voted to repeal the tax, is how the insurance program will continue.
Cumberland County residents voted with a majority of Mainers Tuesday in favor to repeal a bill, passed by the Legislature in April, that would have levied a tax on sugary drinks, wine and beer to help fund Dirigo Health. Pending the repeal effort, the law never went into effect.
The Dirigo Health program was established in 2003 with the goal of insuring some 160,000 Mainers who lacked health insurance. Currently, the program insures only about 18,000 individuals, who pay a portion of the premium based on income.
For now, Dirigo Health will continue to be funded by a system called the Savings Offset Payment, through which insurance regulators assess and collect back the savings insurance carriers experience due to Dirigo initiatives. Opponents of the veto have said this system is unstable.
Dr. Gordon Smith, lawyer and the executive vice president of the Maine Medical Association, said that because of the repeal vote, health coverage will not expand under Dirigo.
But, said Smith, “This isn’t a time to be pessimistic.” While Maine residents repealed the beverage tax, they also largely re-elected the legislators who passed the tax in the first place. Those legislators will likely continue to work to expand health coverage, Smith said. And with Barack Obama in the White House, Dirigo may have better access to federal funds, Smith said, adding that Obama’s health plan requires that all children be covered by insurance.
At the polls, however, voters expressed a variety of opinions on the issue, with some families split on the question.
“That was a rough one,” said Kim Standel of Standish, who voted not to repeal the taxes. “We need health care more than we need sodas.”
Her 18-year-old son, Zak, said he voted yes because he didn’t agree with higher taxes on soda. They voted together at the George E. Jack School in Standish Tuesday morning.
A lopsided majority of Maine residents voted with Zak Standel, supporting the people’s veto 64-36 percent, according to Ted O’Meara of the Fed Up With Taxes coalition.
“I think people are feeling a lot of pressure,” O’Meara said Wednesday. “Every household and every business in Maine is having to make tough choices. They feel like state government should be making the same tough decisions they’re having to make.”
O’Meara said members of the coalition had not decided whether to tackle other tax-related initiatives in the future. The group formed specifically to repeal the beverage tax passed by the Legislature in April.
A lawsuit filed in Kennebec County Superior Court by the Maine State Chamber of Commerce on Oct. 23 asked the court to declare the Savings Offset Payment unconstitutional, a move that would eliminate funding for Dirigo Health.
Dirigo Health has been struggling with a cash flow problem for more than a year, with nearly $20 million borrowed from the state’s general fund between November 2007 and July 2008. Gov. John Baldacci closed enrollment in the plan last year when it was believed the program would run out of money in February 2009 if a new funding source wasn’t identified.
But the beverage tax will not be that new funding source.
“We’re taxed enough,” said Carolyn Davis, 54, of Standish.
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