Dirigo rate hike request angers some Mainers say insurance plan undermined by greediness

GARDINER – Karen Baldauski of Manchester told Maine’s insurance superintendent on Tuesday that she is “disgusted” by Maine legislators and policymakers who have failed to halt the health insurance crisis in Maine.

“The working class is on its knees,” she said.

Baldauski was among a handful of speakers who showed up at a public hearing on Tuesday morning to protest a proposed increase in the cost of monthly premiums for the state-sponsored DirigoChoice program. It was the second opportunity for consumers to voice their opinion of the rate hike. A hearing in Augusta last week drew just one member of the public.

With the innovative insurance plan under constant political fire since its inception, the public has little reason to feel confident in its future, Baldauski told Insurance Superintendent Al Iuppa.

“I cannot trust that Dirigo[Choice] will even continue to exist,” she said. “With the stroke of a pen, it could be gone.”

Anthem Blue Cross and Blue Shield of Maine, which has administered the program since the Governor’s Office of Health Policy and Finance rolled it out in January 2005, has proposed raising the premiums for individuals and self-employed Mainers an average of 23.1 percent. It’s the first DirigoChoice rate increase requested to date. Depending on an enrollees’ age and county of residence, the premium could increase as little as 1.2 percent or as much as 36.6 percent.

Anthem has also requested changes in some DirigoChoice benefits and co-payments. If these changes are approved, the average rate increase would drop from 23.1 percent to 18.2 percent.

Any change approved by Maine’s insurance superintendent would take effect in 2007 when policyholders renew their plans. The company says it is losing money on the DirigoChoice individual and sole-proprietor plans, although it has made a profit on the program’s small-business market.

In addition to her criticism of Maine’s public servants, Baldauski expressed doubt that Anthem has Dirigo’s best interest at heart, referring to the “exploitative nature of greedy corporations” and saying the company is “in a feeding frenzy” of rate hikes and high profits.

Self-employed Richmond attorney Alice Knapp, a former insurance bureau staffer, said the proposed increase would raise her monthly premium from $404.51 to $491.57. An outspoken critic of the for-profit health insurance industry, Knapp suggested that Anthem is not committed to the success of DirigoChoice because it competes with other plans that pay fewer benefits and generate more profits. The company, she said, “has a stake in drowning this product in the bathtub.”

Anthem executives said Tuesday that despite what they consider an over-regulated business environment and a population that is chronically ill and aging, the company is committed to providing meaningful insurance options to Mainers, including those who aren’t part of an employer group. With only about 4,000 of DirigoChoice’s 12,000 enrollees employed in small businesses and the remaining 8,000 enrolled as individuals, the plan is helping fulfill that goal, they said.

But, according to Anthem spokesman Mark Ishkanian, individuals are proving to be heavy users of the healthcare system once they have coverage. Whereas a pool of small-business employees is likely to include both healthy and less healthy members, he said “the individual market may be motivated [to enroll] by a specific medical need.” This “adverse selection” means individuals are more likely to rack up medical expenses, he said.

Though DirigoChoice has only been in business for a short time, Ishkanian said there’s enough data to predict that individual enrollments will cost Anthem more than it can afford to pay and still make a reasonable profit unless it raises premiums now.

According to the nonprofit organization Consumers for Affordable Health Care, Anthem realized a net profit of $4.6 million, or 19.5 percent, on the combined small-business and individual DirigoChoice products in 2005. The consumer group opposes the rate increase, and in a prepared statement on Tuesday, they called on the state to establish a separate, non-profit office to take over Dirigo’s administration.

Iuppa must rule on Anthem’s request within 30 days of the public session.

The debate takes place against a dynamic backdrop. A special task force appointed by Gov. John Baldacci has been charged with restructuring DirigoChoice’s funding mechanism and is expected to report its findings to the new Legislature shortly. Changes are expected to include a reworking of the contentious “savings offset payment,” an assessment on insurance companies equal to savings achieved in Maine’s health care system through the implementation of the governor’s Dirigo Health reforms. These measures include expanding access to health care coverage, improving patient care, and holding down hospital costs and spending.