HEALTH CARE SAVINGS HUNT

A question before legislators today over whether insurers are allowed to pass on to customers a cost of Dirigo insurance has been answered by the presence of a bill that would prevent it.

Currently, insurers can pass on the cost – $43 million this year that Maine’s superintendent of insurance identified as savings wrung from the health care system. But the larger issue is how any savings in the system could be used to lower the cost of health care for everyone.

Late last year, Insurance Superintendent Al Iuppa looked over various voluntary savings within hospitals and insurance companies, plus a small savings in avoided charity care from expanded insurance, and set the $43 million figure, known as the savings offset payment. That payment is to be collected from insurers and passed to the state to support DirigoChoice insurance. The point of contention before the Committee on Insurance and Financial Services is whether that money can be obtained through premiums.

The state says that because the savings were found in the system, no added charge to customers should be needed. Insurers say they’ve gotten all they can from health care providers and don’t see the kind of savings identified by the superintendent. Absent more information, this disagreement could continue indefinitely. The committee should seek more information.

Maine requires insurers to make their best efforts through negotiations to find savings for Dirigo, but there is little besides their word that ensures this has occurred. Insurers look for savings by asking hospitals, currently operating under voluntary price-increase limits, where they have initiated programs because of Dirigo that have resulted in lowered costs, but, again, this is a measure that may not produce an accurate account.

Advocates for Dirigo, to oversimplify only a little, do not trust the insurers to get savings from health care providers for Dirigo or generally. Health care prices in Maine are high for many reasons – Maine’s older population, its regulations and limited competition within the insurance industry are just a few. But neither the public nor legis-lators really know by how much, if any amount, insurers could lower rates through negotiations with care providers.

Maine should find out not only for Dirigo but for all ratepayers. It should provide, perhaps through the Insurance Bureau, independent research to determine what level of premiums would be possible under regulatory standards for negotiation employed here and in other states. The work would track costs and prices through the health care system here and identify potential areas for savings.

The state should take care not to reach a pre-determined answer. Insurers here may already be doing a thorough job with no additional savings likely to be captured. It may find the reserves kept by insurers prudent and not excessive. Or there may be substantial savings to be had under current circumstances or with a couple of small rule changes. The goal would be to inform legislation, rather than simply pass a bill or reject it and hope for the best.

This sort of work would take time, putting on hold the question before the committee today, but not much time given the piles of health data already available and the extent to which related questions have already been studied. With Maine’s health care costs among the highest in the nation, taking a little extra time to look for more savings would be time well spent.