DIRIGO’S FUTURE

The idea of using savings to increase access to health insurance was a cornerstone of the state’s Dirigo Health program, so it is unfortunate to see this linkage abandoned. But, for the sake of increasing and improving health insurance coverage, a new way to fund Dirigo appears necessary. LD 2247 offers that new way and other improvements to the program, but it must be tied to greater public disclosure of hospital and insurance costs.

The bill would fund Dirigo, in which the state subsidizes the cost of health insurance to cover more people, especially small-business owners and employees, with an increase in the tobacco tax and a surcharge on all paid health insurance claims. The savings offset payment, or SOP, which was meant to be a calculation of the health care savings resulting from Dirigo reforms with the money used to subsidize new policies for those without insurance, was a better way to pay for the program. The SOP, however, was highly controversial. Its use and calculations were challenged in court and although its concept was upheld, continuing to use the SOP became politically impossible. It also was costly with the state spending between $3 million and $5 million a year to calculate the SOP which the Dirigo board last year said was $78.1 million, but the acting superintendent of insurance reduced to $32.8 million – and to defend it in court.

Large insurance companies also waged a public relations battle against the SOP, calling it the Dirigo tax and threatening to raise premiums. Giving up the SOP and instituting a real tax – a 1.8 percent surcharge on all paid health insurance claims – gives in to this thinking. Worse, it means that a cornerstone of Dirigo – finding health care savings and using them to extend insurance to more people – will be abandoned.

To avoid this, lawmakers should require health providers and insurance companies to report all of their costs to the public. It costs $20,000 for an operation? What are the components of that price? Doctors’ salaries, medicines and space in the operating room are obvious components. But what about the salary for the hospital CEO, the cost of landscaping hospital grounds and the salary of the health care lobbyists, how much did that add to the bill?

This reporting and analysis of costs is necessary so Dirigo’s three goals – affordability, quality and cost containment – can spread to the larger health insurance market. Lawmakers should require this type of disclosure in exchange for dropping the SOP and funding the program through tax increases.

The changes proposed in LD 2247, which is the subject of a work session scheduled today before the Insurance and Financial Services Committee, help stabilize Dirigo Health, but they do not solve the overriding problem of Maine having one of the most expensive health care systems in the country and a population that, with low incomes and high taxes, cannot afford to sustain that system. Public reporting of health care costs will put the state in a better position to solve that problem.