The Dirigo Health insurance agency is considering changing some benefits and could require future participants to declare their assets before qualifying for discounts to cut costs in a program that is running through money.
“We may need to throttle back,” said Karynlee Harrington, director of the agency that was created through legislation pushed by Gov. John Baldacci in 2003. “We can’t spend more than we have.”
The problem is 42 percent of the current participants in the state-subsidized insurance plan called DirigoChoice have incomes that are just above Medicaid-eligible. That qualifies them for the deepest discount the program offers – 80 percent of their share of the premium – but doesn’t trigger any Medicaid matching funds.
“Forty-two percent are Bs,” Harrington said, referring to the income category of the highest percentage of participants. The “A” group is Medicaid-eligible, triggering a two-to-one match from the federal government and covering 100 percent of the employee’s share. The problem is they are virtually non-existent.
The program was originally budgeted on the premise that 15 percent of participants would be Medicaid-eligible and therefore would actually bring money into state coffers. The reality is only 1 percent fall into that category, in part, because expansions of the Medicaid program called for under the Dirigo Health legislation were either delayed or put on hold.
The B group was budgeted at 3 percent of the total versus 42 percent, and its 80 percent subsidies have to be state funded. Other participants are scattered in the remaining four income categories, with 22 percent paying the full amount because they are over 300 percent of the federal poverty guideline.
As a result of the bad projections, it is costing the state 11 percent more per member than was originally budgeted, according to figures Harrington compiled for a Dirigo Health board of directors meeting on Monday.
There also are fewer people signing up than the 15,500 originally budgeted, and too few are coming in through employers versus signing up on their own. Right now the mix of the 7,897 people on the plan is 44 percent coming in through small businesses and 56 percent as individuals or sole proprietors.
That prompted the Dirigo Health board on Monday to grill Anthem, which is administering the program in partnership with the state, on whether enough is being done to market to small businesses.
Harrington is asking her board to look at requiring asset tests for those with low incomes, taking into account such things as second homes or savings accounts. Currently there is no asset test except for Medicaid-eligible participants. There also could be changes to the benefits offered, including the scope of the drug coverage.
“We just misjudged how many low-wage workers there really are and that they would take up insurance at this rate,” said Trish Riley, the head of the governor’s Office of Health Policy and Finance, who was the chief architect of the Dirigo Health plan.
The latest figures for August show 7,897 people have signed up for DirigoChoice, including policies written for 646 small business employees, 1,342 sole proprietors and 1,398 individuals. When you count dependents, that’s 3,497 people who have come in through small businesses and 4,400 through individuals or sole proprietors – a number that is capped at that level until 2006. There already are 3,000 individuals or sole proprietors on a waiting list for next year.
The number of individuals signing up is a drain on the budget if they’re eligible for a subsidy because there is no employer available to pay part of the premium. When an employer participates, even when it’s a sole proprietor employing himself, they are asked to pick up 60 percent of the premium and the employee 40 percent.
“The board made the decision because individuals don’t have employer contributions…we’d subsidize their whole payment,” Riley said.
The subsidy for individuals may have to change, Riley said, because the goal of the program is to insure as many of the state’s uninsured as possible.
“We are spending more money on fewer people,” she said. “It may take some tweaking of the design to get more people in.”
“When they’re up for renewal there could be some changes,” she added, “but we’re not going to do this in the dark of night.”
The budget problems came up at last week’s meeting of a working group that is trying to figure out how to fairly subsidize the Dirigo Health program through an assessment on private insurance carriers and self-insured companies. The assessment is supposed to recoup savings made as a result of Dirigo Health initiatives, including voluntary caps on hospital profits.
Under law clarified by the Legislature this past session, the state can assess an amount equal to 4 percent of paid claims – a number that is still being determined. Earlier this year, it was estimated the agency would need in excess of $40 million in the next fiscal year to keep going. There is nothing to prevent the assessment from being passed onto consumers.
Harrington said without some assessment “we will run out of money.”
Riley said that shouldn’t be alarming. The program was started with $52 million of one-time money that came to the state initially as Medicaid assistance.
“They call it one-time money for a reason,” she said of the start-up funds.
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