The repeal of taxes on beer, wine and soda to fund the Dirigo Health program leaves lawmakers with the difficult task of keeping the controversial program afloat. They should focus their efforts on capturing savings and reducing costs, while not losing sight of the fact that Dirigo is more than a subsidized insurance program.
Although the insurance component of Dirigo gets the most attention, the program also includes a statewide health plan that emphasizes preventive measures to improve the health of Mainers, thereby reducing medical expenses. The Maine Quality Forum and Advisory Council on Health System Development aim to pinpoint why health care costs are rising and to improve quality by allowing people to compare the costs and outcomes of procedures at hospitals across the state.
Dirigo has been funded by a so-called savings offset payment. The SOP is a calculation of the health care savings resulting from Dirigo reforms, which included quality improvements and cost reductions. The savings are primarily used to extend health care policies to those without insurance.
This year, the Dirigo board said the SOP was $149.6 million; the superintendent of insurance reduced it to $48.7 million, still important savings.
From the beginning, the SOP has been challenged. The Maine State Chamber of Commerce, which sought to repeal the beverage taxes, filed additional legal challenges to the SOP during the recent referendum campaign. Although the payment has been upheld by the courts, calculating and defending the SOP costs the state between $3 million and $5 million a year.
That’s why lawmakers looked for new ways to fund Dirigo and settled on the tax on soda, beer and wine. In addition, a 1.8 percent surcharge was to be assessed on all insurance claims. The surcharge and beverage tax also were meant to pay for other health insurance reforms aimed at bringing more people, especially young people, into the market to encourage additional companies to sell health insurance in Maine and to reduce costs.
With the repeal of the taxes on Election Day, these reforms remain but the new funding source is gone and the SOP remains on shaky ground.
Gov. John Baldacci has said he will ask the Obama administration for a waiver to allow Medicaid funds to partially fund the program. Such a request has been turned down in the past.
Given that the state has diminished financial resources — lawmakers soon will begin to look for ways to trim at least $500 million from the budget — changes to Dirigo may be inevitable. Giving up the idea of using savings to pay for expanded insurance and other reforms should not be.
The first step, which is part of the Dirigo program, is to examine medical costs directly to bring them down. Requiring hospitals and medical practices, for example, to report all their capital expenditures, not just the quarter that require state approval, would open a new avenue for examining spending and priorities.
The coming legislative session will be dominated by cutting costs. When it comes to health care, Dirigo is part of the solution.
On 11/19/08 at 5:58 AM,
Govt2Big wrote:
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Dirigo is nothing but a flaming failure and major waste of tax dollars. Let it die in peace and the Baldacci administration can add it to their growing list of bad ideas and failed programs. Governor, please stop wasting our tax dollars!
On 11/19/08 at 7:07 AM,
Govt2Big wrote:
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If they let Dirigo die away, and based on the following 2007 total payroll & benefits cost of $988,036, this could save taxpayers a nice chunk of change every year (Source: http://www.maineopengov.org):
$147,023 | Karynlee Harrington, Exec Dir Of Dirigo Health
$139,760 | William Kilbreth, Public Service Executive II
$138,482 | Gloria Tomsa, Public Service Executive II
$101,538 | Diane Bailey, Dirigo Health Program Coord
$87,023 | Raymond Vensel, Systems Analyst
$86,842 | D Joshua Cutler, Public Service Executive III
$54,908 | Ruth Burke, Secretary Associate
Please note: the above figures are for PERSONAL payroll & benefits, as compared to Maine's median HOUSEHOLD income level of $42,801. It's time for a reality check on what the Baldacci administration is paying their friends whom work in state government. It's time for some major cuts!
On 11/19/08 at 7:10 AM,
Coolfusion wrote:
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It is obvious that this administration has foisted more than several foolhardy budget busting initiatives on Maine citizens. Attention should be directed to the Maine Maritime Academy in Castine. In the wisdom of the UMS, buying a $1,600,000 estate mansion for the president and to display in the college catalog to recruit out of state students is not certainly not in the interest of struggling Maine students. The Maine Maritime Academy is subsidized $8,000,000 per year for a 900 student body of which HALF are out-of-state students which leave immediately after graduation taking their $40,000 contribution from Maine taxpayers with them. This is insane.
On 11/19/08 at 7:25 AM,
vichet wrote:
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Your suggestions sound a bit too much like a jobs program for state employees to me. The reason insurance companies dont want to work here is not because there are not enough young people to insure... but because of Augustas regulations. No amount of imaginary demographic shifts will change that. Dr Steele in a recent contributor piece had many, but not all, of the answers. I don't always agree with everything the good doctor says but he hit the ball out of the park on this one. From the tenor of this editorial it sounds like you want more of the same Augusta-driven failure.
On 11/19/08 at 8:12 AM,
Steamship wrote:
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Coolfusion; your syntax and sentence structure is terrible. Where did you go to school?
On 11/19/08 at 8:19 AM,
WRofGlenburn wrote:
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Since the Bangor Daily News has been a faithful proponent of Dirigo since its inception you would think they could devise a way to fund their pet program.
They should recommend an extension of sales taxes to periodicals! It would only amount to pennies a day and would apply to everyone that reads a newspaper including tourists and other people from away. That way the BDN not only gets to talk the talk but also walk the walk. Go for it - we'll back you 100%.
On 11/19/08 at 9:36 AM,
downfleeced wrote:
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BDN....FAIL!!! The answer is NOT more regulation, more taxes or more borrowing (stealing). Agreed that Dirigo is known to all as just subsidized insurance but that part is by far the most contentious as it burns through the most cash for such a small impact. Maine needs to look at other states in our great nation that have similar populations and yet have dramatically different health insurance costs. Healthcare costs are rising at a dramatic rate across the board but when one Anthem plan in Maine costs 6,000 dollars and the same Anthem plan with the same coverage costs half that in other states we are obviously doing something wrong. Wake up BDN.
On 11/19/08 at 8:00 PM,
boogyman wrote:
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Hey Govt2Big , are those Salaries including benefits like health and retirement, or are they straight up salaries?
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