LEWISTON – Maine’s Dirigo Health Agency has withstood a significant legal test in Superior Court, but the dispute over how to pay for the program will continue.

Three groups had sued the state, arguing that $43.7 million in savings attributed to Dirigo was inappropriate, that the law creating the agency was unconstitutional and that assessing insurance companies to recover the savings amounted to an illegal tax.

Superior Court Justice Roland Cole ruled Aug. 4 in favor of Dirigo on all three counts.

“Today’s decision is a validation of the savings offset payment,” said Trish Riley, the director of the Governor’s Office for Health Policy and Finance. “It was a victory across the board. … It takes a cloud off the finances that have been supporting the program.”

The Maine State Chamber of Commerce, Maine Association of Health Plans and the Maine Automobile Dealers Association Insurance Trust had sued to stop the assessment, which the state began collecting in April.

All three said they were considering their options and would likely appeal the decision to the Maine Supreme Judicial Court.

“When this appeal was first filed, everyone involved in the case understood that it was going to be headed to the law court,” said Bruce Gerrity, a lawyer with Preti, Flaherty, Beliveau, Pachios and Laley, which represents the auto dealers.

On the same day that the court made its ruling appearing to legitimize the assessment, the Dirigo Board of Directors voted to defer a decision on savings from Dirigo’s second year, which the Bureau of Insurance has calculated as $34.3 million.

Instead of setting the final assessment amount, the board tabled the issue to allow Gov. John Baldacci’s Dirigo Blue Ribbon Commission time to consider whether to continue the savings offset payment as well as other funding alternatives.

“It’s a recognition that this has been a very hard fought and heavily litigated process,” Riley said. “The board wanted to give the blue ribbon commission the ability to consider all options.”

The commission meets Wednesday and must file a final report by Dec. 15.

Kristine Ossenfort, a senior governmental affairs specialist with the state Chamber of Commerce, said she was encouraged that the commission would have a chance to look at the savings offset payment, but her optimism was muted at best.

“They didn’t decide not to assess the $34.3 million,” Ossenfort said. “They decided to defer the decision. There’s a real possibility that the SOP could be still assessed.”

And that means high insurance premiums for Mainers, Ossenfort said. “We continue to be concerned about the impact of the savings offset payment.”

Included as part of the Dirigo Health Reform Act, the savings offset payment has been controversial since the law’s earliest days. It gives the superintendent of the Bureau of Insurance the authority to determine how much money Dirigo has saved the health care system and then recover that money from insurance companies.

Dirigo has several components, which aim to increase access to health insurance, improve quality and contain costs. Dirigo Choice is a subsidized insurance product that was billed as a way to reduce the number of uninsured in the state.

“For me, the question was not about whether the Dirigo Health Agency was within the law,” said Tarren Bragdon, director of health reform initiatives at the Maine Heritage Policy Center, a conservative think tank that is critical of Dirigo. “It’s whether it’s an effective program.”

“It was supposed to eliminate all the uninsured in five years,” Bragdon said. “It was supposed to cover 30,000 in its first year and it covered 7,500 people … The Dirigo Health debate will continue on several fronts. It’s likely to continue in court, as part of this year’s election and into the next legislative session.”

Baldacci was just as quick to offer praise for one of his signature programs.

“With over 15,000 Maine people covered by Dirigo Health and $78 million in savings, Dirigo Health continues to move forward and make strides for all Mainers,” Baldacci said in a prepared statement.


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