Maine lawmakers ultimately were unable to agree on proposed changes to the state’s subsidized DirigoChoice health insurance program by the time the Legislature adjourned earlier this month. As a result, the program must suspend enrollments temporarily and look for other ways to trim costs just when supporters were hoping to see it expand coverage and become financially more autonomous.

“We will suspend enrollment temporarily until such time as there are adequate resources,” said Trish Riley, director of the Governor’s Office of Health Policy and Finance and one of the principal architects of the Dirigo program. Speaking on Thursday after a meeting of the Dirigo Health Agency board, Riley said the program would stop enrolling individuals on July 1. Small businesses and self-employed people no longer will be allowed to enroll beginning Sept. 1.

About 14,400 people now are covered by DirigoChoice. The new caps will stay in effect until additional funding for the program is identified, Riley said.

There are important exceptions: babies born to women who are covered by Dirigo will be eligible for coverage, new employees of small businesses with Dirigo contracts will be allowed to enroll, and any individual who can pay the full monthly premium and doesn’t need a subsidy may sign up.

Workers displaced from their jobs as a result of competition from other countries also will be eligible.

The insurance program once again will contract with Anthem Blue Cross and Blue Shield of Maine, instead of becoming self-insured. The self-insured option is popular among many Dirigo supporters and was made possible by legislation passed during the session.

Gov. John Baldacci’s proposed budget included an infusion of $16.3 million for the Dirigo Health Agency, on top of about $34.3 million the agency will receive through the controversial “savings offset payment,” or SOP, an assessment paid into the program by insurance companies. The extra $16.3 million wasn’t included in the negotiated budget approved by the Legislature, however.

Without the additional cash, expanding enrollments and adopting self-insured status are not financially feasible, according to Karynlee Harrington, director of the Dirigo Health Agency. By capping enrollments, she said, “we’ll be able to manage our revenues through the SOP and stay operational through the coming fiscal year.”

Baldacci’s multifaceted “Dirigo 2.0” legislation, rolled out in mid-May, proposed a broad spectrum of initiatives. These included lightening the state’s regulation of insurance companies and identifying an alternative to the SOP. A three-way split in the Legislature’s Insurance and Financial Services Committee resulted in three different versions of the measure, all of which ultimately failed to gain the support of the Legislature.

The SOP is designed to recapture savings in the health care system brought about by DirigoChoice and other state initiatives. The money provides premium subsidies for Maine people who are unable to afford the DirigoChoice plan’s monthly premiums.

But the calculation of the SOP – $43.7 million in Dirigo’s first year and $34.3 million last year – has been sharply disputed. Insurers argue the basis for determining the savings is too broad and results in an inflated figure. Businesses say insurers simply pass the cost of the SOP on in the form of higher premiums to their companies. Insurers and the Maine State Chamber of Commerce have filed a number of complaints and lawsuits contesting the assessment, several of which are still pending.

Despite a recent court ruling upholding the SOP methodology, Riley said Baldacci is determined to find a less-contentious funding mechanism. She is hopeful that the administration’s “good-faith effort” to identify an alternative will help defuse the animosity that has grown up around the funding issue. But for the time being, the onerous SOP lives on. A hearing to determine the amount of the third-year payment is scheduled for July 23 and 24.

According to Joe Ditre, executive director of the advocacy group Consumers for Affordable Health Care, it was a mistake to tie a change in DirigoChoice funding to the easing of insurance regulations in a single piece of legislation. The two interests, one a largely Democratic effort and the other backed by Republicans, should be considered separately, Ditre said.

“By hitching … Dirigo funding to market reform, the whole thing collapsed,” he said Friday. “And if they don’t separate these bills and say Dirigo has a mission and market reform is something else, it will happen again.”

Though DirigoChoice may be stalled at the center of a political maelstrom at the moment, Ditre said the program has proved its value and is not at risk of foundering.

Assistant Senate Minority Leader Richard Rosen, R-Bucksport, agreed that the complicated legislation proposed by the governor and rewritten by the insurance committee was “unworkable.”

“The effort to find an alternative funding stream to pump into Dirigo subsidies and operations is a very different challenge than market reforms being advanced,” Rosen said. “It proved to be nearly impossible to blend them together.”

Rosen said most Republicans support the idea of providing state-funded health insurance subsidies for low-income Mainers.

“But there’s no reason for the state to insist it has to be in the marketplace with its own product,” he added. The combination of market reforms and providing subsidies for commercial insurance policies should work to make health coverage more affordable for all Mainers, he said.

Rep. John Brautigam, D-Falmouth, House chairman of the Insurance and Financial Services Committee, said current Dirigo policyholders “don’t need to worry” about the viability of the program.

“If people have DirigoChoice coverage, the product will be there for them,” he said.

Brautigam said the insurance committee did its best to craft a comprehensive piece of legislation that could win bipartisan support.

“People were open to discussing things, but we just ran out of time,” he said. “I don’t think there can really be a deadline on something like this. We’ll keep working on it.”