AUGUSTA – If elected governor in 2006, Republican Peter Mills will close enrollment in Dirigo and in a Medicaid program, he said Monday. Dirigo has “failed,” Mills said, and is creating a new tax on Mainers.

Gov. John Baldacci’s administration fired back, saying Dirigo has harnessed health-care costs for Mainers.

The exchange illustrates that health care is among the biggest battles in the gubernatorial race, dividing Republicans and Democrats.

Speaking after a State House news conference to promote his campaign, Mills said he voted for Dirigo two-and-a-half years ago, but now feels the program was a risky experiment that failed. He said it’s time to move on.

“We can’t reach the promises we’ve made to the 7,300 people we have enrolled in Dirigo,” Mills said. If elected governor, “I would close down enrollment so we don’t make the situation worse.”

When he voted for Baldacci’s signature program it was to cover Maine’s uninsured using federal money. Instead, Dirigo is being paid by what Mills called a “$31 million tax” on private insurance.

“The Medicaid match is almost non-existent.” Dirigo is supported “entirely by taxation on people who pay medical bills” – the 700,000 Mainers with private insurance, Mills said. “The state’s picking it all up and transferring the burden in everybody’s medical payments.”

The administration disagreed strongly, insisting the money that will support Dirigo next year “is absolutely not a tax! It’s a savings,” said Dirigo architect Trish Riley.

Because of Dirigo, last year health care spending was $44 million less, a finding recently reached by Maine’s Bureau of Insurance.

It’s now up to insurers to return the money they didn’t spend to consumers, Riley said. Some of that savings will be used to continue Dirigo, she said.

Mills also said he would close enrollment and charge higher premiums in a Medicaid program for parents.

The program, he complained, is too generous. It covers families earning up to 200 percent of poverty guidelines – $38,600 a year for a family of four.

“For a small premium you get Cadillac coverage,” Mills said. A family with an annual income of $38,600 pays $64 a month for an entire family, he said. “They’re getting practically free health insurance. If you make $39,000, you’re just over the limit” and don’t qualify. “You’re in the market on your own paying the full boat.”

The solution to those kind of programs with “cliffs” is Dirigo, Riley said, because “it ends those kind of cliffs.”

The administration disagrees with halting Medicaid enrollment, Riley said. For every $1 Maine spends on Medicaid, the federal government spends $2.

Families in that program have jobs “where employers aren’t paying for them,” Riley said. “The state’s footing the bill.”

Among those showing their support for Mills Monday were Kathy Watson of Pittsfield, a former Republican chairwoman; former U.S. congressional candidate Dick Campbell; and former Republican Party executive director Dwayne Bickford.

Other Republicans seeking the party’s nomination this June to run against Baldacci include state Sen. Chandler Woodcock, R-Farmington; former U.S. Rep. David Emery of St. George and Stephen Stimpson of Bangor.

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