Democrats came up short on votes for two bills to change the structure of the Dirigo Health insurance program and secure its funding for this year, finally giving up and adjourning for the year late Wednesday night.
The defeat does not immediately jeopardize the existing state subsidized insurance plan covering about 10,000 people, but leaves it open to pending lawsuits that could cut its funding. In the meantime, insurance companies and the self-insured will continue to be assessed a $44 million payment or so-called Dirigo tax that can be passed along to consumers.
It also means the state may keep dealing with Anthem as a partner in Dirigo even though Gov. John Baldacci earlier this year called for an end to the relationship to, in his words, “take out the profit-making middleman and use those dollars to pay for more coverage and more marketing.”
The next move appears to be up to Anthem. Its current contract with the state to run Dirigo ends in January and negotiations for next year, if they’re going to happen, need to begin soon. Anthem was the only company to bid on Dirigo when it started.
“Dirigo continues to function and operate as it has all along,” Senate President Beth Edmonds said after the bills were defeated. “We will continue to build on the success of Dirigo, and work to improve it.”
Gov. Baldacci last night announced the creation of a special commission to recommend alternative ways to pay for the program and ways to reduce and control health care costs.
“A lot of very good work has been done on Dirigo,” Baldacci said in a prepared statement. “The Legislature made strong efforts to keep Dirigo intact and protect consumers. We need to build on these efforts.”
By late afternoon Wednesday it was clear the bills were perhaps beyond hope. One had been defeated in the House in a tie vote and the other had gone down 16 to 17 in the Senate.
“There is one more chess move,” House Speaker John Richardson told Democrats in a caucus meeting, referring to a possible amendment in the Senate that didn’t ultimately materialize.
One bright spot in the day for Democrats, who hold a three-vote majority in the Senate but just one vote in the House, was a bill to offer police and firefighters state subsidies for their health insurance when they retire. The bill, which was heavily lobbied by union firefighters, was immediately signed by the governor after it passed largely along party lines.
The first Dirigo bill that got defeated would have allowed the Dirigo Health Agency to create a self-insured program rather than contracting with Anthem. A contingent of Republicans on the Insurance and Financial Services Committee stuck together to defeat the plan.
“It’s an ill-conceived, muddleheaded, ideologically driven proposal that has come before this body,” said Rep. Kenneth Lindell, R-Frankfort.
Democrats said the proposal would give Dirigo Health more flexibility in designing the insurance plan, allow more people to sell it, and save on administrative costs. Republicans countered the state would be on the hook for covering all the claims and would end up spending as much as it saves on administrative costs by having to hire outside consultants to run the program.
“The argument is it would save money. That argument really ignored the reality,” said Rep. Kevin Glynn, R-South Portland, who hammered away at the bill on the House floor as he had done on the insurance committee. “They’re going to have claims that Anthem won’t be paying. They have produced no plans as to where those reserves are going to come from.”
The second bill defeated was a brokered agreement between Democratic leadership and a coalition of the Maine State Chamber of Commerce, insurance companies and the Maine Hospital Association. It essentially cut in half an already-approved $43.7 million assessment to keep Dirigo Health insurance going this year.
In return for cutting the assessment or savings offset payment to $23 million, coalition members agreed to pay that amount regardless of how their lawsuit currently before the court comes out. In that suit, the coalition argues the payment was miscalculated by the state and most of it should be voided.
The payment was based on how much the state’s insurance superintendent agreed had been saved last year in health care costs as result of Dirigo Health. The $43.7 million included $2.7 million in savings attributed to insuring the uninsured; $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. The suit argues that just the $2.7 million are savings directly attributable to Dirigo Health.
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