Opponents of a bill to block insurance companies from passing millions in assessments onto consumers to fund the Dirigo Health program say they support some form of state subsidized health insurance for the uninsured but want a better way to pay for it.
Proponents say the opponents are just trying to find a way to kill the Dirigo insurance plan and are tying to do so by eliminating its “lifeblood.”
About the only thing both sides could agree on in their debate recently before the Insurance and Financial Services Committee was any savings in the system as a result of the state health plan were nearly impossible to track.
A bill sponsored by Sen. John Martin, D-Aroostook, would prevent insurance companies from passing on what is being called a savings offset payment to their customers in the form of higher premiums. The assessment is $43.7 million and will be charged to private insurance companies and businesses that self-insure, including big companies like Hannaford and L.L. Bean. The bill is aimed at insurance companies and the largest one in the state by far is Anthem.
“The information you will have available is minimal from the industry,” Martin told the committee. “It’s clear to me we’ve generated savings. The only question is where are the savings going to go?”
As for Anthem’s claim that it already included the savings in its premiums, which would have been higher without Dirigo, Martin called on the insurance companies to open up their books and show where the money went. “If they can’t do that, they’re lying,” he said.
Erin Hoeflinger, the president of Anthem in Maine, countered that the state’s superintendent of insurance in a recent ruling on an Anthem rate hike acknowledged “Anthem has made best efforts to ensure recovery of the savings offset payment through negotiated reimbursement rates with health care providers…and may include a charge in its rate for the actual savings offset payment.”
In essence, she said, Martin’s bill “would require the insurer to pay twice.”
The savings offset payment, as envisioned by legislators, was supposed to equal the savings in the healthcare system brought about by Dirigo Health initiatives passed in 2003. Chief among them was DirigoChoice – a state subsidized health insurance plan administered by Anthem – that was supposed to reduce bad debt and charity care by helping insure the state’s 135,000 uninsured. The plan also called for voluntary caps on hospital spending.
Last year the state’s superintendent of insurance ruled those savings amounted to $43.7 million – almost all of it attributed to the hospital caps – and that became the amount the state could charge back to insurance companies and the self-insured. The assessment, which the state will start to collect in April, is needed to fund the DirigoChoice insurance program through 2006.
The issue became controversial among voters this year when Anthem sent notices out in its bills saying: “As a result of the Dirigo Health Act in Maine, your rates include both the savings and a savings offset payment amount.”
“I think that’s when the public got angry,” said Sen. Nancy Sullivan, D-York, chairman of the committee.
Sen. Peter Mills, R-Somerset County, a committee member and candidate for governor, said it was a “matter of bookkeeping,” with hospitals saying they had smaller cost increases under the voluntary spending cap and passed those savings onto insurance companies, which in turn didn’t raise their rates as much as they would have.
“We’re wallowing around with a lack of evidence,” Mills said, because it’s nearly impossible to trace the savings backwards.
Steven Michaud, president of the Maine Hospital Association, said the best thing the state could do was get rid of the savings offset payment as a means of funding Dirigo.
“If you do not fix the savings offset payment, we’ll be here every single year. Either here or in court,” he said. “It requires a new funding mechanism.”
Dana Connors of the Maine State Chamber of Commerce and a member of the Dirigo board of directors agreed and said he was working with the hospital association and a consortium of insurance companies to offer a funding alternative to Gov. John Baldacci.
“They’re setting up the insurance industry as the problem, but they’re not. The real problem is the savings offset payment and that’s where the focus should be,” Connors said.
“We’re not saying, ‘let’s kill it,'” he said of the Dirigo program. The issue is finding a new way to fund it. “I bet there’s a better one out there,” he said.
Dr. Robert McAfee, chairman of the Dirigo board of directors, said he didn’t believe opponents of the bill truly supported the Dirigo program.
“You will hear over and over again that opponents profess to support DirigoChoice. One cannot support DirigoChoice and eliminate its lifeblood,” he said.
McAfee said it was impossible to tell what the insurance companies were up to in their rate setting.
“Rate setting by insurance companies is a black box – none of us knows what costs and savings an insurer incurs. We simply do not know the detail behind how an insurance company builds its rates,” he said.
Rob Walker of the Maine Education Association, with 25,000 members, said if the savings offset payment is allowed to be passed onto consumers it will hit “already underpaid employees.” He estimated the cost at $4.4 million, of which $3.4 million will be paid by school districts and $1 million by employees and retirees.
He questioned the use of the payment as a means of supporting Dirigo, saying “it’s a tax on people who do it right,” including employers who offer health insurance.
As for whether the hospitals and insurance companies have passed savings along, Walker said, “I wouldn’t trust anybody’s numbers and that includes the Dirigo plan itself.” He said it was no coincidence the agency identified $43 million in savings and that turned out to be the amount it needs to stay afloat this year.
The committee will take up the bill again in early March.
Send questions/comments to the editors.
