AUGUSTA, Maine — The viability of the Dirigo Health program is closely entwined with Gov. Paul LePage’s plan to overhaul MaineCare, lawmakers learned Thursday.

The governor’s proposal, designed to close an estimated $220 million gap in the Department of Health and Human Services budget, calls for axing MaineCare coverage for about 19,000 childless adults in the next fiscal year. But to pay for their final months of coverage in this fiscal year, LePage wants to take $10 million from Dirigo.

Much of that loss would be offset by another part of LePage’s plan, which tightens income limits for parents covered by MaineCare. The state now funds MaineCare coverage for those parents with Dirigo money. LePage has proposed dropping coverage for parents earning more than the federal poverty level, or $22,350 annually for a family of four, which would save Dirigo more than $9 million, according to Joe Bruno, chairman of the Dirigo Health Agency board.

Dirigo is operating with a $24.5 million surplus, Bruno said. That money will carry the program to 2014, when Dirigo either will transform into one of the state health insurance exchanges mandated by the federal health reform law or dissolve.

The program can absorb the loss of the $10 million this year, but if lawmakers fail to approve LePage’s plan for stricter income limits for some parents, Dirigo will be in trouble, Bruno told members of the Legislature’s Appropriations Committee on Thursday.

“That’s about a $20 million hit or more to Dirigo that we can’t survive,” he said. “We would have to probably stop enrollment immediately and come up with a new plan and probably not be able to do any subsidized enrollment.”

Dirigo, which has been controversial since it was created by former Gov. John Baldacci in 2003, offers both subsidized and unsubsidized health insurance plans to individuals, small businesses and the self-employed. It’s funded largely through assessments charged to insurance companies on paid claims and also receives money from the Fund for a Healthy Maine, another target of LePage’s proposal. About 16,500 members were enrolled in Dirigo as of November.

MaineCare is the the state’s version of the federal Medicaid program and is funded with both state and federal dollars.

The committee heard Bruno’s report as part of budget deliberations this week over the MaineCare proposal, which would drop coverage for 65,000 low-income Mainers. The panel spent most of Thursday continuing to walk through services slated for cuts, including case management for adults with developmental disabilities, substance abuse problems, HIV and homelessness.

The committee plans to meet again Friday.

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