In addition to extending health insurance to many of those unable to afford it, Dirigo Health aimed to find savings in the state’s health care system and use those savings to pay for the program. In searching for a new way to pay for Dirigo, and other health insurance reforms, lawmakers are giving up the cost savings component, likely weakening the state’s efforts to make health insurance more affordable and available. To avoid this, any new funding mechanism should require greater public disclosure of health care costs from providers and insurance companies.

Dirigo has been funded by a so-called savings offset payment. The SOP was meant to be a calculation of the health care savings resulting from Dirigo reforms, which included quality improvements and cost reductions. The savings were to be used to extend health care policies to those without insurance.

The use of the SOP and the annual calculation of savings were challenged in court by the insurance industry. Although it was upheld, calculating and defending the SOP was costing the state between $3 million and $5 million a year. Last year, the Dirigo board said the SOP was $78.1 million; the acting superintendent of insurance reduced it to $32.8 million, still important savings.

Large insurance companies also waged a public relations battle against the SOP, calling it the Dirigo tax and threatening to raise premiums to cover the tax. By giving up the SOP and instituting a real tax, lawmakers have made this a reality, opening up a messy debate over which is the best tax to raise to pay for the program.

A new funding bill, LD 2247, proposes to pay for Dirigo through a 1.8 percent surcharge on all insurance claims and an increase in the state’s tobacco tax. The surcharge and tax would also pay for other health insurance reforms aimed at bringing more people into the market to reduce costs. Due to strong opposition in the Senate, the cigarette tax has been dropped in favor of a tax on alcohol and syrup used to make soda.

This idea comes from a 2006 commission that recommended Dirigo be funded through an increase in “sin” taxes on cigarettes, beer, wine, soda and snacks. This was based on the rationale that using or consuming these products contributes to obesity, alcohol abuse, lung disease and other costly health problems.

While this is at least partially true, this approach taxes individuals to make insurance more affordable, in turn, improving health care. A better approach would be to examine medical costs directly to bring them down, making health care more affordable. Requiring hospitals and medical practices, for example, to report all their capital expenditures, not just the quarter that require state approval, would open a new avenue for examining spending and priorities.

This is no less contentious than debating whether to tax cigarettes, stout or potato chips or to rely on a savings offset payment. But, to reduce health care costs, lawmakers must know what those costs are. Taxing cupcakes and Chardonnay doesn’t answer that question.