Dirigo Health off to a dreadfully slow start

In an Aug. 19 editorial, the Bangor Daily News concludes that results of a recent survey of Dirigo Health enrollees suggests that despite setbacks the program is worthy of more time to prove itself. A careful reading of the survey results, though, tells a different story, casting serious doubts on the program’s ability to provide coverage to the uninsured and lower health care costs for the rest of us.

Dirigo Health was launched nearly a year ago with the promise of providing health insurance to thousands of previously uninsured Mainers. It was to create an affordable insurance product to be marketed to small businesses, whose premium payments would provide 80 percent of the funding for the program with the state drawing down some federal money through Medicaid and recouping other savings to supply the rest.

This unique public-private partnership was celebrated as an inventive approach, but the whole plan hinged on Dirigo Health creating a plan that was affordable for small businesses. It would not work unless the employer premiums came in to provide the bulk of the funding, which would subsidize insurance for those most in need.

Did it work? The results are not quite as promising as the BDN suggests.

First, Dirigo Health is off to a dreadfully slow start. Only 8,100 of a projected first-year enrollment of 31,000 have signed up after 10 months on the market. It is no secret that the program has struggled to appeal to small businesses, most of which have found it to be no less expensive than other insurance products on the market. Though sole proprietors and individuals have been signing up, gaining access to a lower-cost group insurance plan for the first time, small businesses, which were to be the primary vehicle by which the program was to deliver insurance to those in need and, more importantly, the main source of the program’s funding, make up only 40 percent of those enrolled, half of what was anticipated. How will the program fund itself?

While Dirigo’s high costs to employers are well known, the survey also revealed that the program may be suffering as a result of its similarly high costs to enrollees, 40 percent of whom said they found it to be as expensive or even more expensive than what they were paying for their previous health coverage. How do these high costs encourage enrollment?

Is the program at least filling a need? It’s hard to say. Dirigo was created for the uninsured, but the survey shows that nearly four out of five Dirigo enrollees already had insurance either all or part of the year prior to enrolling. Insurance access was even better for the families of Dirigo enrollees, with 81 percent of spouses and 88 percent of children having been fully insured before joining Dirigo. Rather than shrink the rolls of the uninsured, it would appear that the program has mainly shifted people from private plans to public, taxpayer-funded insurance.

Dirigo argues that its program provides better coverage. The survey shows, though, that enrollees did not appear to be in great need of better insurance, with nearly three-quarters reporting either adequate prior coverage or no need for medical services in the year prior to enrolling.

Has Dirigo at least helped cut the costs to the health care system of the charity care provided by health care providers? Hardly. Since the majority of Dirigo enrollees had already been insured prior to enrollment, their most costly care would have been covered by insurance anyway. The approximately 1,800 people in the program who were uninsured previously were estimated to be costing the system about $1,000 a year in bad debt and charity care, but those same enrollees are now costing taxpayers $1,800 each to insure under Dirigo, $800 more than they were costing the system before.

It gets worse. Since Dirigo Health is well on its way toward burning through the $53 million of federal funds used to get it off the ground, the state will soon saddle Maine people with a tax of up to 4 percent on health insurance premiums in order to continue funding the program. The rationale behind the imposition of what Dirigo Health is euhemistically calling the “savings offset payment” is that the savings to the insurance industry Dirigo is generating should be recouped through a tax.

But if we’re insuring so few, who had cost us so little beforehand, and doing it with a program that is this costly, where are the savings to be had? If we are to fund the program by raising taxes on insurance premiums that are already unaffordable, aren’t we actually making the problem of uninsured Mainers even worse?

The BDN takes the position that we should give the program time, but how long should we wait, when results from the agency’s own survey clearly demonstrate that major changes to the program are needed if it is to meet any of its goals?

The time is now for Dirigo to start showing some results. The people of Maine can’t afford to wait.

Rep. Stephen Bowen, R-Rockport, represents Camden and Rockport in the Legislature. He serves on the Appropriations Committee.