AUGUSTA – Gov. John Baldacci says he will ask the new administration of President-elect Barack Obama in January to allow the state to expand the Dirigo Health insurance program using the federal Medicaid program.

“Where one door may have closed with the repeal of the taxes, the other door opened with the new administration,” Baldacci said in an interview. The governor said Obama said throughout the campaign that he would be more open to looking at innovative approaches to expanding access to health coverage.

“We have that in Dirigo,” he said. “I look at it [the election] overall as a plus.”

Voters overwhelmingly rejected the taxes lawmakers had narrowly approved earlier this year to fund Dirigo. The taxes, which included an additional 4 cents on a can of soda, 7 cents on a bottle of wine and 16 cents on a six-pack of beer, were opposed by a coalition that called itself “Fed Up With Taxes.” The coalition collected enough signatures to suspend the taxes and get its repeal question on the ballot. More than 64 percent of voters statewide supported the repeal on Nov. 4, according to unofficial election results compiled by the Bangor Daily News.

The governor said using the premiums paid by employers and individuals to Dirigo as a match for Medicaid funding could allow the program to cover more Mainers. Enrollment is now frozen. He said when the program first was passed in 2003, getting federal Medicaid dollars was part of the plan.

“We tried this with the Bush administration,” he said. “They rejected our effort but approved similar waivers for Massachusetts and Vermont.”

Such a waiver would be significant for the program. Employers and individuals are paying about $22 million a year in premiums. The state is providing subsidies of about $25 million through the savings offset payment. Medicaid would bring in about two federal dollars for every state or premium dollar.

“This was always constructed as a way to bring in more federal matching funds,” Baldacci said.

Funding for the current state subsidy comes from the savings offset payment, which is paid by health insurers based on a complex formula that determines the savings the Dirigo Health law has generated. The law is more than the insurance program and includes cost-containment provisions.

But last month the Maine State Chamber of Commerce filed a lawsuit charging the savings offset payment is unconstitutional. The governor shrugs off the legal challenge.

“The savings offset payment has been litigated once before,” Baldacci said. “It went all the way to the [state] supreme court, and they found it constitutional in their opinion.”

The state’s insurance superintendent determined in September that the health care system savings attributable to Dirigo Health amounted to $48.7 million last year, about one-third of what had been claimed by the Dirigo agency’s board.

Trish Riley, director of the Governor’s Office of Health Policy and Finance, said that was enough revenue to keep the program going, but not enough to expand it to help reduce the number of uninsured in the state. According to the most recent statistics available – June figures from the U.S. Census Bureau – about 10 percent of Mainers are without health insurance.

“I would like to see us have the opportunity to leverage those private resources, those payments by employers and individuals,” Baldacci said. “What we are doing [with Dirigo] is keeping people [off] the Medicaid program and keeping them working.”

He said a major goal of the overall Dirigo program is reducing health care costs by prevention. He said that while the health insurance part of the program has received most of the attention, the other parts are also significant.

“It’s helping people become healthier,” Baldacci said. “It helps keep people from hospital emergency rooms and it is helping to improve our overall healthcare system.”

He said health quality improvement efforts are working and are part of Dirigo. He said such long-term efforts as reducing smoking and encouraging exercise will result in lower health care costs in the future.

“I will be long gone from here, and we will still be seeing benefits from the Dirigo program,” Baldacci said.