Businesses cautious on health plan Proprietors hopeful Dirigo can solve state insurance crisis

The support of small businesses is essential to the success of Gov. John Baldacci’s plan to provide affordable health insurance to working Mainers. And expanding insurance coverage is key to the governor’s larger goal of reining in health care costs.

But some critics of the Dirigo approach maintain Maine’s small businesses won’t be able or willing to absorb the upfront cost of insuring workers and their families. The plan requires participating businesses to pay over half of their workers’ premiums.

In an informal sampling this week, area businesses expressed cautious support for the governor’s plan, and optimism it can correct the state’s growing insurance crisis.

Beginning in July 2004, Dirigo Health, a new state agency, will contract with private insurance companies to market employer-based coverage to Maine’s 180,000 uninsured residents, 80 percent of whom work at least part time.

Dirigo aims to offer employers with 50 or fewer workers insurance they and their employees can afford. An estimated 31,000 enrollees are required to get Dirigo Health off to a solid start in its first year. The enrollees’ total monthly premiums of approximately $300, more than half of which is supposed to be paid by employers, will be crucial in providing the steady flow of revenue needed to keep commercial insurance companies participating.

The plan promises a sliding scale of subsidies for employees, but participating employers will have to pick up roughly half the price of premiums without assistance.

At Sullivan Automotive in Old Town, co-owner Gary Sullivan said he’s interested in the Dirigo product. He doesn’t provide insurance to his 12 full-time and five part-time employees.

“We’ve always wanted to offer insurance,” he said, “but it gets further from reach every day.”

Sullivan himself is insured through his wife’s job at a local hospital. His 21-year-old son, an employee, pays $450 a month for individual coverage.

Sullivan’s retirement-age parents pay $1,390 a month, with a hefty deductible, while they wait to become eligible for Medicare. His father is a co-owner of Sullivan Automotive.

Sullivan said he’s been too busy lately to pay much attention to what’s going on in Augusta, but he said he hopes the new program will make it possible to offer the coverage his workers need.

“They understand there’s no way we can offer it now,” he said, “but I think everyone here wants to have it.”

In Brewer, Mid-State Contractors roofing company employs 11 full-time workers. The company does not offer health insurance. Estimator and office manager Crystal Gould said the workers, including herself, have no coverage at all.

Gould said the Dirigo plan sounds promising. The rough figures used to model the plan for the Legislature seem workable, she said. But until the details are worked out and the program takes effect next summer, she said, it’s hard to know whether Mid-State will participate.

An East Machias logging supply company with about 35 full-time workers offers limited coverage. It’s expensive and just a few workers have signed up, said an employee who didn’t want her name or the company’s name used.

But the state’s employer-based solution probably won’t help, she said. “It’s a lot of money to ask an employer to pay,” she said. “For a small company like us, barely keeping our head above water, it wouldn’t be feasible.”.

David Weiss, co-founder of the nonprofit Northeast Historic Film in Bucksport, said he does offer his seven full-time employees a coverage plan, but they pay the entire monthly $450 individual premium themselves. Not all of them can afford it, he said. A few have told him they’ll have to leave if he can’t find a way to make things better.

Although the Dirigo plan’s mandated employer contribution means Weiss might have to cut salaries, he said, overall he and his employees would be better off.

Beyond that, Weiss said, he feels some obligation to help the larger effort to bring down the overall cost of health care in Maine. “I can’t say this is somebody else’s problem. I can’t just say it should go away. I feel it is part of citizenship to do whatever you can.”

David White, who owns an imported-car repair business in Bar Harbor, said it currently costs him $47,292 a year to provide coverage for his four workers and their families. The price has doubled in two years, he said, affecting what he can pay his employees and driving up his customer charges.

White, a member of the Maine People’s Alliance, served on the diverse team that advised Trish Riley in Dirigo’s earliest days. He said he recognizes some employers will find it hard to absorb the cost of providing Dirigo coverage to their employees, but it’s in their best interest to do so.

“The leading driver of local taxes is schools,” he said. “And the leading driver of school budgets is health care. If we fix health care, we arrest rising taxes, increase wages and bring down the cost of goods.”

“Everyone has some responsibility to make this work,” said Dirigo architect Trish Riley on Friday. The director of Baldacci’s Office of Health Care Policy and Finance, Riley said Dirigo is built on the premise that most employers feel some pressure – ethical, financial, civic – to offer their employees health care coverage.

Ultimately, Riley said, the challenge to the yet-to-be-appointed Dirigo Board of Directors is to work with commercial insurers, small-business owners and health care providers to hammer out the specifics of a marketable insurance product that companies and their employees will want to buy.