DATA AND TAXES

No sooner had a commission on Dirigo Health’s subsidized insurance announced its proposal to fund it through new taxes than House Republicans responded with their opposition. It’s hard to blame them.

An essential promise of DirigoChoice is that it would increase efficiency in Maine’s health care system by getting more people better coverage at improved prices and then share those efficiencies among all residents. But if the best Maine can do is to raise “sin” taxes – on cigarettes, beer, wine, soda, snacks – as proposed, even finding those efficiencies, never mind passing on their savings, would become much harder.

At the core of the debate over Dirigo is something called the savings offset payment (SOP). That’s the money that is saved in the system because of the presence of Dirigo. For the last two years, that amount has been around $30 million – relative peanuts, but contested by the several groups, including the insurance industry, which through the SOP process is supposed to negotiate lower rates from health-care providers and pass the savings to Dirigo.

There is, at best, minuscule savings, these groups say, despite the figure the state uses. Various opponents have brought lawsuits, started legislative battles and made threats to pull apart the Dirigo system. The Blue Ribbon Commission on Dirigo Health was assigned the job of finding a way around this conflict and devise cost-containment methods.

In addition to the tax proposal, the commission is considering mandates on business and individuals above 400 percent of poverty that would require them to obtain insurance or pay into a fund that would get it for them. This “play or pay” method is being tried elsewhere, but it too runs into the problem of the tax – by itself, it doesn’t bring down health-care costs.

The SOP is an indirect route to transparency for providers and insurers. The commission might have been asked to determine from those most strongly opposed to the current SOP calculation a more accurate measure for savings. More directly, it could have proposed rules for letting the public see where the costs for one of the most expensive systems in the country actually come from. The possibilities are many – mandates imposed by the state, a spread-out, redundant network of health facilities, poor negotiating by insurers, high administrative costs throughout, overutilization by patients.

Figuring out the actual cost drivers in health care so that Maine can understand, with hard data, why its costs are so high is the first step toward bringing them down. The group to do it is the Maine Health Access Foundation, which was founded six years ago after the sale of Blue Cross to Anthem. It has the resources and the reputation to take on such a large project.

Though reforms in Maine’s reporting rules have helped the state gain a better idea about health-care costs, it still is a long way from having a complete picture, and that makes requests for more taxes to be dumped into a system few understand a difficult sell. A complete examination of health costs would reveal targets for reform and would take much of the argument out of recapturing savings.