Dirigo Care is being funded by newly imposed taxes on health insurance claims, as well as on goods such as beer, soda, wine, and tobacco.

Tax Promises Broken

“Voters were assured Dirigo would never require an increase in taxes,” said Tarren Bragdon, CEO of the Maine Heritage Policy Center. “Those promises were repeatedly broken.”

Dirigo Care has cost the state’s taxpayers nearly $164 million in the four years since its inception. Although its intended purpose was to insure 128,000 people who had no health coverage, only 4 percent of that total, or just over 5,000 individuals, have been successfully removed from the rolls of the uninsured and into the state program, according to figures from the Maine Heritage Policy Center.

“Dirigo Care has been worse than useless,” said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. “Not only has it failed to cover many people, but all the false promises surrounding it have distracted Maine from doing anything that would actually help improve the situation.”

On April 15, Gov. John Baldacci (D) signed LD2247, An Act to Continue Maine’s Leadership in Covering the Uninsured, expanding the Dirigo Care program by $28 million annually.

“I am proud to say that we’re moving toward a day when health insurance will be affordable for, and available to, all Mainers,” said Baldacci at the bill signing.

Tobacco Taxes Hit Poor

Taxpayers are footing the bill for the increased spending, as the state levied a 1.8 percent tax increase on paid insurance claims, raised taxes on alcoholic beverages, and increased tax rates on tobacco products. That “doesn’t make a lot of sense,” said Devon Herrick, a senior fellow with the National Center for Policy Analysis.

“Tobacco taxes fall predominantly on low-income households, so raising tobacco taxes to fund health insurance is akin to taxing the poor to provide coverage to the poor,” Herrick said. “If Maine truly wants to cover more people, it needs to make coverage more affordable.”

The tobacco tax increase was levied in two parts. The cigarette tax was increased by 50 cents, and then the tax on every other tobacco product sold in the state was increased to match the total tax on cigarettes, a procedure Baldacci called “equalizing tax treatment” of tobacco products.

‘Costly, Ineffective Failure’

Dirigo Care supporters say repealing the new taxes would take away health coverage from 18,000 Mainers and remove subsidies that make individual health care coverage more affordable for 40,000 more.

Bragdon disagrees, calling Dirigo Care “a costly, ineffective failure that best serves as an example of what not to do.”

“Politicians in Maine, like politicians in Massachusetts, are addicted to government spending–while taxpayers are stuck with the bill, and continue to see no benefit,” said Carla Howell of the Committee for Small Government, a grassroots Massachusetts organization dedicated to limited government.

“Dirigo Care was enacted with the lofty goal of covering the uninsured,” Bragdon said. “Maine has one of the highest state and local tax burdens. We should not be adding more taxes for this boondoggle, particularly at a time when Maine families are struggling with record high gas and heating oil prices and an uncertain economy.”

Past a ‘Train Wreck’

John Garven, president-elect of the Illinois State Association of Health Underwriters, concurs.

“What is really great about Dirigo is that it, along with the Massachusetts Connector program, are the only two examples that we currently have of ‘universal health care’ schemes that have actually been implemented in the United States,” Garven said. “Dirigo is the more ‘mature’ of the two programs, and it is already past the train wreck stage.”

If the state were seriously interested in increasing the number of insured Mainers, says Herrick, it should have worked to reduce the cost of health care “by eliminating excessive mandates and costly regulations [on health insurance], such as guaranteed issue and community rating, that drive prices up.”

Krystle Russin (krystle@purepolitics.com) writes from Texas.

By: Heartland.org – Mon, 08/25/2008 – 21:34

Before the new law imposed taxes on health insurance claims and on goods such as beer, soda, wine, and tobacco (see “Maine Residents Angered by Expansion of Dirigo Health Care Subsidy,” page 1), “offset payments” were used to fund the program. The complicated system was just as controversial as the new one.

Trish Riley, chief health policy advisor to Gov. John Baldacci (D), cautioned supporters of the tax repeal effort to “be careful what they wish for.” She said the current “savings offset payment” (SOP) system could force all citizens to pay up to 4 percent more to the state on top of their current premiums to help fund Dirigo. That might prove worse than the tax rates set this July by the state legislature.

The taxes approved to replace the SOP include a $4 per gallon tax on syrup used by restaurants to make soft drinks, 42 cents a gallon on bottled drinks, and a doubling of the current tax on beer and wine, including store-bought alcohol for consumption elsewhere, raising the beer tax from 25 cents to 54 cents a gallon and the toll on wine from 30 cents to 65 cents a gallon.

The funding package also includes a 1.8 percent tax on all paid health insurance claims, which is similar to the current SOP except, as Victoria Wallack wrote in the Times-Record newspaper on June 12, “the tax would not have to be approved through the past series of courtroom-like hearings that cost the state an estimated $1 million to prepare for and defend each year.”

The SOP for the current fiscal year is set at $32.8 million, or 1.7 percent of paid claims. Two years ago, it was $43.7 million, or 2.4 percent of paid claims.

The money helps pay the premiums and out-of-pocket costs for DirigoChoice enrollees who qualify for help based on income, and it also pays the state’s share of Medicare costs.

The new tax law was set to go into effect in mid-July. Now that the repeal effort has successfully made it past the signature stage, the SOP mechanism will be used to fund Dirigo Care until voters make a final decision in November.

Aricka Flowers (aflowers@hotmail.com) writes from Michigan.

By: Heartland.org – Wed, 08/27/2008 – 15:00

Many Maine companies offer between two and eight choices of health insurance plans. The options will usually have different costs to the employee both in the amount deducted from their paycheck and the total cost of the coverage for deductibles, co-pays and co-insurance over the course of the year.

Studies have shown that consumers typically do more research when buying a car or a major appliance then they do in selecting a health insurance plan. These studies also indicate that most people spend an hour or less reviewing their insurance plan options and often just default to the plan they have had the previous year.

“It’s a mistake not to look carefully at your plan options each year and carefully weigh which plan is the best fit for you and your family,” said Dan Corcoran, president, Anthem Blue Cross and Blue Shield. Corcoran noted that often consumers will choose the plan that has the least impact on their pay check when that choice may not be the best choice overall.

Plans with higher monthly premiums and lower co-pays and deductibles might be best for those who anticipate using a lot of health care services over the course of the year. On the other hand, young and healthy people without kids might save with a plan that features low premiums and a high deductible.

But there are always tradeoffs. For example, a lower cost plan may have more “pre-authorization” requirements in order to see a specialist.

Here are some general consumer tips for choosing a health insurance plan:

1. Do your homework and take advantage of the tools offered to you. For example, your company may offer benefit plan meetings where you can ask questions and compare plan options. A little time invested in this meeting can pay help you choose the best plan for your family’s needs.

2. Examine your family’s past health care spending. The best way to determine a good plan fit for 2009 is to understand what health care services your family used this year.

3. Before continuing on your current plan, read the detail. Many employees will carry over their plan choice from year to year without examining the details – have the co-pays and deductibles increased? Often employers will change these levels as a result of the increasing cost of health care services. It pays to read the detail.

4. Verify in advance that your physician and hospital are part of the network for the plan you are choosing. This is especially important if you are switching your insurance company or and you are switching to a different health plan.

5. Take advantage of your health care flexible spending account, if appropriate. Health care flexible spending accounts use pre-tax dollars to help pay health care expenses like co-pays and deductibles but you must carefully estimate and use all the money in these accounts during the course of the year.

“In the past, you may have quickly looked over your benefit statement and chosen the same plan for next year or not done anything and defaulted into your previous year’s selection,” said Corcoran. “But this year, with all the economic pressures consumers are facing, it makes sense to really study your plan options to best meet your family’s needs.”

By: Anthem Blue Cross and Blue Shield – Fri, 10/31/2008 – 07:26

According to the new Portland, Maine, Market Overview, increasing numbers of Maine physicians are practicing in hospital-based and hospital-affiliated practices to benefit from better reimbursements on MaineCare and Medicare services. Industry groups estimate more than 75 percent of physicians statewide are affiliated with a hospital, although the number may be less in the Portland, Maine, area.

The most recent conversion took place in October 2008, with the merger of Southern Maine Medical Center and the multispecialty medical group PrimeCare Physician Associates to form Southern Maine Medical Center PrimeCare Physicians. With more than 1,200 employees, it has become one of York County’s largest employers.

“While health system affiliation decreases physician independence, physicians in Maine are benefiting not only from improved reimbursement rates, but also from the increased access to technology that a large health system may provide,” said Chris Clancy, analyst with HealthLeaders-InterStudy. “Specifically, the integration means physicians will be better equipped to transfer to electronic medical records, making healthcare processes more timely and convenient.”

On the recruitment front, efforts are underway to attract physicians to the state. In February 2008, MaineHealth’s Maine Medical Center announced a partnership with Boston’s Tufts University School of Medicine, where Tufts medical students will serve the third and part of the fourth year of their studies in Maine. Starting in 2011, 20 of the program’s 36 seats will be reserved for Maine students, who will receive subsidized tuition.

By: HealthLeaders-InterStudy – Wed, 12/10/2008 – 12:30

The reportalso analyzes two coverage initiatives — Dirigo Choice and a Medicaideligibility expansion — and issues such as financing sources,incentives for small firms, employer mandates, plan administration,cost-containment provisions and benefit design (Commonwealth Fundrelease, 12/5).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily HealthPolicy Report is published for kaisernetwork.org, a free service of The HenryJ. Kaiser Family Foundation. 2007 Advisory Board Company and KaiserFamily Foundation. All rights reserved.

By: kaisernetwork.org – Thu, 12/06/2007 – 18:27

Supporters of the legislation say it will help resolve issues related to thevariable amount of the fee, which has ranged from 1.7% to 2.4%. The amount isintended to be based on how much money the program, and other initiatives thatcover the uninsured, have saved the health care system over 12 months. The billalso would increase the state cigarette tax from $2 per pack to $2.50 per pack.

Opponents contend that insurers and self-insured employers should not pay asurcharge and that the fee is added to the premium of policyholders. "It’sstill paid by the same people who are struggling with their own healthinsurance costs," Kris Ossenfort, a lobbyist with the Maine State Chamber of Commerce, said.

The Press Herald reports that "both sides are racing toattract legislators to their side" as the Legislature is scheduled toadjourn on Wednesday. The plan is expected to pass in the state House whereDemocrats outnumber Republicans 90 to 59, but "it is not clear whether itcan win the Senate, where Democrats outnumber Republicans by just onelegislator," the Press Herald reports (Huang, Portland PressHerald, 4/8).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation. 2007 Advisory Board Company and Kaiser FamilyFoundation. All rights reserved.

By: kaisernetwork.org – Fri, 04/11/2008 – 14:38