Dirigo’s board figures 2005 savings at $41.5M

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AUGUSTA – The board that oversees Maine’s Dirigo program on Friday determined that the universal health care program saved $41.5 million last year in overall health care costs.

The estimated savings figure, while not final, is important because it accounts for a major part of the funding for the 3-year-old program that was an early priority of Democratic Gov. John Baldacci.

Dirigo, which seeks to expand health coverage to tens of thousands of uninsured and underinsured Mainers, is a prominent issue in this year’s gubernatorial campaign, with Baldacci defending it from attacks by Republicans challengers who see it as ineffective and overfunded.

The Dirigo Health board’s preliminary calculation takes into account savings resulting from Dirigo reforms, such as reductions in bad debt and charity care because more uninsured and underinsured people have coverage.

Among the other factors contributing to the savings are hospitals’ voluntary compliance with cost-cutting targets and tighter restrictions on new medical construction.

The $41.5 million figure will be reviewed by the state Insurance Bureau before it becomes official. It is used to calculate “savings offset payments” insurers must pay to finance Dirigo, but does not necessarily correlate to the amount insurers are assessed.

A group representing labor groups, churches and others advocating for broader health coverage said Friday it was pleased overall with the board’s finding but believes the savings figure could have been higher.

“We’re happy that the board found almost $42 million in savings that will be used to cover more uninsured and underinsured Mainers,” said Joe Ditre of the nonprofit Consumers for Affordable Health Care.

Ditre said his group was also pleased that the board recognized the cost-cutting effects of all of the Dirigo agency’s initiatives.

The company that’s contracted with the state to provide the insurance plans, Anthem Blue Cross-Blue Shield, also views Friday’s decision as a positive development, said Anthem spokesman Mark Ishkanian, although it continues to have concerns about the methodology used to determine the figures.

Anthem was pleased the Dirigo board reduced savings initially estimated in the $100 million range to the $41.5 figure, said Ishkanian.

Savings for 2004 were calculated at $43.7 million. But that figure has been challenged in Superior Court by the Maine Association of Health Plans and two other business organizations. Their suit challenges the formula used to calculate the savings.

The suit also calls the fees, which are based on savings that result from Dirigo reforms, “arbitrary and capricious.”

The savings issue is in play in the State House. Before recessing last month, the Legislature’s Insurance and Financial Affairs Committee narrowly advanced a plan to cut the $43.7 million payment, which insurers must pay, to $23 million.

The proposal would also make available to Dirigo Health another $11 million that had been set aside as a potential cost cushion for Anthem. Lawmakers are expected to take up the issue when they return to the State House on May 22.

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