Dirigo bill to help more Mainers get insurance

In challenging economic times like these, more Maine families and businesses struggle to afford health coverage. LD 2247, An Act to Continue Maine’s Leadership in Covering the Uninsured, sponsored by Rep. Hannah Pingree, provides an important opportunity to bring health security to more Mainers, reaffirming Dirigo’s goal of universal access to health care.

First, it includes important market reforms to make health insurance more affordable for those who do not have employer-sponsored coverage and who buy health insurance on their own. About 40,000 people in Maine currently buy health care in the individual market where prices are becoming increasingly unaffordable. The most widely sold product in the individual market is one with a $15,000 deductible. While such a product can be a reasonable option for individuals with higher incomes, for the average Maine family that kind of policy exposes them to many out-of-pocket costs they cannot cover. The reforms included in LD 2247 will take a bite out of rising health care costs in that market, will provide lower cost products to attract younger people into the pool and will allow for pilot projects to develop insurance products specifically designed for people under age 30.

Today those buying individual health insurance tend to be older and less healthy whose higher costs for care drive premiums up. LD 2247 creates incentives to attract younger people to join the pool and protects older people from higher rates. By adding more younger, healthier people whose costs are lower, we will be able to stabilize the rates in the individual market for everybody.

Secondly, the LD 2247 will allow us to get beyond the contentious financing for the important DirigoChoice program. It proposes to replace the savings offset payment with a predictable surcharge of 1.8 percent on claims paid for health coverage in Maine. The current savings offset payment allows that charge to be as high as 4 percent and requires the Dirigo Health Agency and the superintendent of insurance to document savings to justify the surcharge. That process – to document savings – is an extraordinarily costly and contentious one.

By replacing the savings offset payment with the flat and predictable surcharge, we limit the potential liability of payers, making the charge more predictable. The surcharge is less than the average annual charge of the savings offset payments that have been paid to date.

In addition, the bill proposes to assess a 50 cent tax on tobacco products and to equalize tax treatment of all tobacco products. These combined revenue streams eliminate the unpredictability and the contentiousness of the savings offset payment and, importantly, provide funding for the individual market reforms, the continuation of DirigoChoice and the coverage of more than 5,000 low-income parents through MaineCare.

Enactment of LD 2247 will allow us to move on with our important efforts to assure universal access to affordable quality health care coverage for Maine citizens. Last year the Dirigo Health Agency was able to negotiate a new relationship with Harvard Pilgrim Health Care, ranked the nation’s No. 1 health plan in consumer satisfaction by US News & World Report. As a nonprofit health insurer, Harvard Pilgrim shares the Dirigo mission of providing affordable quality health care to all. In taking on the DirigoChoice product, Harvard Pilgrim Health Care has created new and important competition in the individual insurance market – competition that has been lacking for many years. Today, Harvard Pilgrim enjoys about a 20 percent market share in the individual market.

The Dirigo Health Agency and Harvard Pilgrim Health Care are an important new partnership in Maine. With the stable funding and the individual market reform included in LD 2247, we will be able to continue Dirigo Health – a program now providing health coverage to about 18,000 Mainers: your neighbors who are in small businesses or self employed, individuals who can’t afford coverage without the program and working low-income parents.

Importantly, we will retain our leadership in health reform and be ready to work with a new Congress and a new president in hopes of partnering with the federal government to expand our efforts to be sure every man, woman and child in Maine has access to affordable quality health care.

John Baldacci is the governor of Maine.