AUGUSTA (AP) -Gov. John Baldacci, against the backdrop of a broadening debate over his plan to rebalance the state budget, elected not to send a representative Thursday to a public hearing on a bill to bolster the troubled Dirigo Health program he originally championed.

“The Baldacci administration believes this is the right policy at the wrong time,” Trish Riley, Baldacci’s health policy director, told the Legislature’s Insurance and Financial Services Committee in a letter.

Specifically, Riley wrote that the Baldacci administration objected to a new tobacco tax levy, including an increase in the tax on a pack of cigarettes from $2 to $2.50, included in House Majority Leader Hannah Pingree’s bill.

“Last year, Governor Baldacci supported a $1 increase in the price of cigarettes,” Riley wrote, recalling a proposal that did not advance. “We still believe higher cigarette taxes are good public policy. But now is not the time.”

Echoing previous comments by Baldacci himself, Riley added: “The governor’s first priority right now is to balance the budget and protect Maine’s economy. The governor believes the best way to do that is to hold the line on taxes.”

Riley’s letter said that “when that task is complete,” the governor “will be eager to revisit” the bill to reshape Dirigo Health, which was created in 2003 as a step toward universal health care but has drawn criticism for falling below enrollment expectations.

Elsewhere on the budget front, the Appropriations Committee resumed work sessions, receiving reports from other legislative panels on Baldacci’s new package to offset the second $95 million gap to be recorded in recent months.

At the same time, the Health and Human Services Committee, which has jurisdiction over areas affected by a large portion of the overall $190 million revenue shortfall, was hoping to wrap up its own review in advance of reporting back to the Appropriations panel on Friday.

Pingree’s Dirigo Health bill, drawing in-person support Thursday from Senate Majority Leader Elizabeth Mitchell, would change the funding mechanism for the Dirigo program by repealing a controversial savings offset payment that targets insurers and replace it with a health access surcharge of 1.8 percent on paid claims.

Additionally, the bill would establish a reinsurance association for the individual health insurance market without placing individuals in a separate risk association.

Under its provisions, individual premium rates charged by a carrier during a rating period could not exceed 2.5 times the lowest individual rate charged by the carrier.

The state superintendent of insurance, meanwhile, would be authorized to approve a pilot project to let health insurance carriers offer individual health insurance products for young people under the age of 30.

Pingree, in her prepared remarks to the committee, said her bill “is not the ultimate long-term fix to all of Maine’s health care challenges, but it is an important step to continue Maine’s leadership forward in covering the uninsured, giving Maine’s small businesses an affordable health insurance option and stabilizing our rocky individual insurance market.”

The Consumers for Affordable Health Care coalition presented testimony in support of funding Dirigo Health in the Pingree bill, as did the Roman Catholic Diocese of Portland.

A qualified endorsement also came from AARP in testimony that said the organization “will support the 50-cent increase on tobacco and cigarettes only if the governor also supports that tax increase as well.”

Opposing the measure was the Maine State Chamber of Commerce.

Prepared testimony from chamber representative Kristine Ossenfort voiced a variety of concerns, concluding that the bill “continues to impose the burden of funding the Dirigo Health program on the backs of the very people who are struggling with the very significant weight of their own health care costs.”

Tarren Bragdon, chief executive officer of The Maine Heritage Policy Center, argued against additional funding for Dirigo.

“Today, the program covers only 4,466 Mainers who were previously uninsured, which is less than four percent of the 2003 goal, in a program that costs over $45 million a year. Now Maine taxpayers are being asked to provide additional funding for a program which isn’t close to meeting its original goals,” Bragdon said in a statement.

The hearing on the Dirigo bill, with its indirect link to the state budget, came one day after hundreds of demonstrators swarmed through the State House to criticize human services cutbacks contained in Baldacci’s supplemental package.

“There’s more to do to bring down health care costs – Maine spends more on health care than every other state but one,” Pingree said in her statement Thursday.

“But, most importantly, Dirigo was an early leader among states attempting home-grown health care solutions and provides a platform for Maine to join in the emerging national debate about health reform. I am hopeful that the work we have done will help us to be ready if and when new federal opportunities emerge to help finance state-based health reform,” Pingree said.

AP-ES-03-13-08 1629EDT