DIRIGO PROGRESS

State Rep. Kenneth Lindell’s proposal last week to expand the types of Dirigo Health choices was a breakthrough in a lengthy fight over the future of the program. Whether his plan would help Maine remains to be shown, but it marks a public turn toward wider legislative cooperation that should be encouraged.

Rep. Lindell, R.-Frankfort, believes a high-deductible plan coupled with a health-savings account (HSA) would produce coverage less expensively than Dirigo’s currents options and would be affordable for all by having employers or the state subsidize the savings accounts to help pay the deductible. He deserves credit for contributing this thoughtful possibility, and a bipartisan committee has been formed to examine it in detail. A welcome change from both supporters and detractors of the program.

To work, however, Rep. Lindell acknowledges that his plan would rely on “the existing funding structure – flawed as it is,” which means specifically relying on what is known as the savings offset payment. That is the $43.7 million identified by the superintendent of insurance earlier this fall as saved within health care in Maine, savings that did not exist before Dirigo’s presence and, in keeping with Dirigo’s legislation, directed back at the program to extend affordable insurance to more Mainers.

The savings were identified at the end of a long process that scrutinized the system to make certain they actually existed. It is the job of the insurance industry to recover these savings and pass them along to Dirigo without inflicting any added cost on their customers. Meanwhile, Republicans have called the savings offset payment a tax and demanded that it be rescinded. Recently, Rep. Josh Tardy, assistant leader of the House Republicans, said Maine should “jettison this tax immediately.”

Beyond an initial one-time state payment, Dirigo is funded from a limited number of sources: employee and employer contributions, the savings offset and a lesser amount of Medicaid money. If that “tax” is jettisoned, the program dies. Republicans swear mightily that it is not their intention to kill Dirigo, but there are no other major sources of funding.

Yesterday, the Dirigo Health board rejected a proposal to leave some of the offset payment with the insurance companies or hospitals. That is a smart move because that money can be used to expand coverage while reducing the cost to Maine families.

It is certainly needed in its entirety if Maine is to increase the number of choices under its insurance plan. The decision is a commitment to insure more, not fewer, people.

Understandably, insurers are reluctant to count on getting that money through negotiation with the health-care industry, a difficult process. On the other hand, the state’s largest insurer, Anthem Blue Cross, is required by its association to carry risked-based capital of about $98 million (well above the state’s requirement of $65 million), yet it currently has more than twice that, approximately $200 million in reserves, according to Anthem spokesperson James Kappel. More astounding is the growth of that reserve – in 2000, the company had only $25 million in that fund.

The money is in the system and the savings are there too. Dirigo is designed to find those savings, though this is and will continue to be a long, difficult process. Republicans’ support is crucial, so their willingness to work on improving Dirigo rather than just opposing it is a positive change that should go even further.