DIRIGO’S SAVINGS

Recent complaints from insurers and others who say premiums could be pushed higher because of an assessment to fund the Dirigo health care plan badly miss the point and the process of Dirigo. There is no good reason for private-insurance premiums to rise because of a Dirigo assessment, and Maine’s insurance superintendent should investigate any increases that are attributed to the state plan.

Dirigo is to be funded from a variety of sources, among them the savings from hospitals, physicians and insurance carriers who cut their rates as a result of Dirigo’s savings targets. Other savings, to a lesser extent, come from the avoided cost of reduced bad debt and charity care – the extension of state-backed insurance has left fewer people without means to pay for care. Still other savings come from limits on some forms of capital investments.

Overall, these lowered costs to hos-pitals and other providers that exist because of the presence of the state health plan should result in lowered rates to privately insured patients. That increment of savings, capped at 4 percent of paid claims and by the actual costs of the Dirigo subsidies, is the money now claimed by Dirigo.

Identifying that amount is difficult. The hearing before Bureau of Insurance Superintendent Al Iuppa this week in Augusta has already uncovered errors in the tabulation, which initially placed the savings in 10 areas at around $136 million. More errors may show up as the hearing proceeds, which could either increase or decrease the estimated savings. But the underlying point is that there are measurable savings.

Superintendent Iuppa, who has limited authority to approve part or all of the savings identified by the Dirigo board, is expected to decide by Saturday what the number should be. That reduced cost in the health care system is all Dirigo will be allowed to draw from insurers. This isn’t an added tax on ratepayers; it’s not a surcharge, though Anthem warned some customers that its recent large increase in rates for 2006 “does not include a potential savings offset payment of up to 4 percent under Maine’s Dirigo Health Initiative.”

That’s not money to get from ratepayers but from the institutions that had lowered costs as a result of Dirigo. This is, admittedly, a challenge even for the state’s largest insurer, but it is up to all insurers to negotiate for the savings with hospitals. Their ability to negotiate more favorable rates should be helped by the savings identified this week, but in any event insurers cannot pass on rate increases in their individual or small-group plans without the bureau’s approval. (Persuading the superintendent to agree to a rate increase because he had the savings number wrong would be difficult.)

Perhaps an even better incentive for insurers is an obvious alternative to rate negotiation: a version of Medicare’s price index administered by the state and measured for outcomes by the Dirigo Quality Forum. The monopolistic nature of much of health care these days would make state-set rates attractive to some legislators, more so if insurers were to declare they have insufficient leverage to negotiate in such a rural state.

Whatever number the superintendent decides is the health care savings, the point is to make available affordable care to more Maine residents. That means the savings caused by Dirigo go to those insured by Dirigo without insurers asking any more from their customers.