What will it cost?

If the law survives the effort to repeal it in November, state officials say the following price increases will occur:

Beer: 2.6 cents for a 12-ounce beer, 3.5 cents for a 16-ounce beer, 15.9 cents for a six-pack.

Wine: About 7 cents on a 750-milliliter bottle.

Soda: About 4 cents for a 12-ounce soda, 5.3 cents for a 16-ounce soda, 6.6 cents for a 20-ounce soda.

The question:

“Do you want to reject the parts of a new law that change the method of funding Maine’s Dirigo Health Program through charging health insurance companies a fixed fee on paid claims and adding taxes to malt liquor, wine and soft drinks?”

A yes vote changes the new law.

A no vote retains the law as written.

Drink tax opponents outspend its backers

AUGUSTA – Groups trying to repeal a new Maine law that bolsters Maine’s Dirigo Health subsidized insurance program with, in part, higher taxes on beer, wine and soda, have so far enjoyed strong business support and almost twice the amount of financial backing as have supporters of the law.

Initial campaign finance reports show substantial business backing for the repeal drive: Maine Beer and Wine Wholesalers, $100,000; Maine Restaurant Association, $25,000; Maine Beverage Association, $25,000; Maine Soft Drink Association, $15,000; Maine Automobile Dealers Association, $10,000; Maine Innkeepers Association, $6,000.

Also reported was a $25,000 in-kind contribution from the American Beverage Association for polling.

Repeal opponents brought together as Health Coverage for Maine reported receiving $10,000 from the Maine State Employees Association and $100,000 from S. Donald Sussman of Greenwich, Conn., chairman and CEO of Paloma Partners management company.

At issue is a funding measure enacted, ironically, on April 15.

After the idea of a 50-cent-per-pack increase in the cigarette tax was discarded, House and Senate majorities earlier this year settled on increased taxes on beer and wine made by large producers as one way to strengthen Dirigo Health.

The new package also imposes new wholesale taxes on soda and syrup used to make it.

Additionally, the law being challenged would replace an indeterminate savings offset payment assessed on health insurers with a 1.8 percent surcharge on paid claims.

According to a legislative staff analysis, the soft drink tax – if implemented – would increase revenue in the Dirigo Health Fund by $9.2 million in fiscal 2009, while the increase in the excise tax on beer and wine would increase revenue in the Dirigo Health Fund by $7.5 million in fiscal 2009.

Critics of the higher taxes rose up, and in August, Secretary of State Matthew Dunlap validated their petition to allow a statewide vote asking Mainers if they want to repeal the new funding scheme.

The Fed Up With Taxes coalition argues that the proposal would raise $75 million of new taxes on beverages and health-care claims.

“With the rising costs of gasoline, heating oil and groceries, this is absolutely the worst time to be increasing taxes on beverages we all enjoy such as flavored water, juice drinks, beer, wine and soda,” Gary Emmons, the owner of Exit 43 Quik Stop in Richmond, says in one Fed Up commercial.

The defense of the new financing package, in which the bulk of the funding would come from a new assessment on health-care claims, is being led by a No on One Coalition, whose members include the Maine Medical Association and the Maine People’s Alliance.

“Ensuring hardworking families and their children have access to quality and affordable health coverage, and continuing programs that save nearly $50 million in unnecessary health care costs, is worth a few pennies on beer, wine and sugared drinks,” the coalition asserts.

Fed Up critics of the financing package maintain it was passed without normal review. Proponents of the package dismiss that complaint, saying its thrust had been generally discussed.

For beer, under the pending law, an excise tax is increased from 25 cents/gallon to 54 cents/gallon. State officials say the increase amounts to about 2.6 cents for a 12-ounce beer, 3.5 cents for a 16-ounce beer and 15.9 cents for a six-pack.

An excise tax on wine is increased from 30 cents/gallon to 65 cents/gallon, so that on a 750-milliliter bottle of wine, the increase would be about 7 cents.

The pending measure would impose a new tax of $4 per gallon of soda syrup, or 42 cents/gallon of bottled soda. State officials say the tax amounts to just under 4 cents for a 12-ounce soda, 5.3 cents for a 16-ounce soda and 6.6 cents for a 20-ounce soda.

Earlier this year, Baldacci administration officials said the disputed funding measure would allow for limited new Dirigo Health enrollment.

The director of the administration’s Office of Health Policy and Finance, Trish Riley, said program participation would probably remain in a range of about 17,000 or 18,000, including 5,000 or more MaineCare parents and 12,000 or more DirigoChoice policy holders.

The enacted measure includes some so-called market reforms.

Included are a reinsurance program through which Dirigo, which offers full cost and subsidized insurance, would pay for some major claims, a program to promote coverage for healthy young people and adjustments in allowable charges for high-risk and low-risk consumers.

Within past months, financing for the Dirigo Health program, created in 2003, has become especially shaky.

In an August report, the Legislature’s Office of Fiscal and Program Review said Dirigo Health Fund cash balances had become increasingly negative since November 2007, contributing to declining balances in the state’s cash pool.

In July, Dirigo Health Fund average cash balance was almost $20 million negative, the analysis by the legislative office said.

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