AUGUSTA – A dispute over a key funding source for the Dirigo Health program edged closer to the legislative arena as Gov. John Baldacci said he will support a bill to prevent insurers from passing on fees they must pay to ratepayers.

The Dirigo program, designed to extend health coverage to thousands of uninsured and underinsured Mainers, has been a priority program for the Democratic governor and stands to be a major issue in the 2006 gubernatorial election.

The program, authorized by the Legislature in 2003, draws funding from savings achieved through voluntary spending caps by hospitals and other cost-control efforts. Insurers that reap benefits from those savings are required to turn them over to Dirigo Health.

Earlier this week, the Dirigo board voted to collect from insurance companies nearly $44 million in assessments resulting from health savings. Some of the state’s insurers have said they will increase premiums to make up for the assessments they must pay.

That has prompted sharp criticism from Baldacci and legislation that the governor says he will support.

Sen. John Martin’s bill would prevent insurers from increasing premiums to make up for the cost of Dirigo assessments. Martin, D-Eagle Lake, said the understanding all along between the state and health insurers was that Dirigo costs would not be passed along to policy holders.

Baldacci said the state went through a thorough process to determine the amount of savings in the health care system that can be attributed to Dirigo.

“The intent was that insurance companies would use the money they had saved because of Dirigo to support the program moving forward. If, in fact, that’s not followed, I’ll support legislation that’s already introduced that will make sure they cannot pass that on in terms of a premium increase to premium payers,” Baldacci said.

Spokesman Mark Ishkanian of Anthem Blue Cross Blue Shield, which has partnered with the state to provide the DirigoChoice product to 8,500 Maine residents, said news of Baldacci’s position “is disconcerting to us.”

Katherine Pelletreau, executive director for the Maine Association of Health Plans, which represents Anthem, Aetna, Cigna and Harvard Pilgrim, said insurers strive to reduce rates when possible to remain competitive.

Pelletreau said the insurers’ position is that until there are savings in the marketplace, “they don’t really exist.”

Rep. Kevin Glynn, a Dirigo critic, believes the state is trying to recoup money from a smaller increase in costs, not a savings. The South Portland Republican said insurance companies have no choice but to pass along the cost because they never saved money in the first place.