DirigoChoice's savings, effectiveness in question

In Depth: Health Care Reform

In Depth: Health Care has information, stories and polls regarding Dirigo Health and what it means to Mainers.

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DirigoChoice, the government-subsidized insurance program that started in January, is supposed to save the state's health care system millions by providing affordable coverage to uninsured people who would otherwise turn to charity care or simply fail to pay.

So the big questions these days are: Exactly how many previously uninsured people are getting coverage through DirigoChoice? And will the savings and other cost-cutting measures be enough to support the program?

Preliminary figures cited Thursday indicate that roughly one-third of current enrollees were previously uninsured; another one-third were covered by plans from Anthem Blue Cross Blue Shield of Maine, which is also the carrier for DirigoChoice. The remainder were insured by other companies.

With 6,366 people enrolled in DirigoChoice as of May 1, that suggests that some 2,100 enrollees were previously uninsured. But the number's significance - as well as its accuracy - is a matter of serious debate.

Critics of DirigoChoice, who prefer free-market solutions such as health savings accounts and deregulation of the insurance industry, portray the figure as abysmal. Rather than working toward the governor's promise of covering all of Maine's 130,000-plus uninsured within five years, DirigoChoice is taking clients from other insurers, they say.

"I'm not sure I understand where the savings are going to come from," Joan Harrigan, a senior executive with the TD Banknorth Insurance Group, said Thursday during a Portland Regional Chamber breakfast panel on Dirigo Health.

The program's supporters, though, say that the estimates are unreliable, and that an ongoing telephone survey will provide more accurate data. They say it's unlikely that all applicants checked off their previous status, and that dependents may not have been counted.

Supporters also say the early estimates ignore the fact that DirigoChoice is picking up the underinsured - people whose insurance deductibles are so high that insurance only kicks in during a catastrophe.

"We have people moving from high-deductible plans into DirigoChoice - that's not eroding the market. It's creating a market for a good product at an affordable rate," said Joe Ditre, executive director of the advocacy group Consumers for Affordable Health Care, who also spoke at the breakfast.

DirigoChoice, supporters say, provides more comprehensive benefits, including 100 percent coverage for preventive care, and is priced on ability to pay. The program is also seen as encouraging competition among other insurers.

Harrigan, who used to work for Anthem, was the first person to publicly present numbers related to how many enrollees were previously uninsured. But Anthem spokesman Mark Ishkanian said the numbers were "very preliminary estimates based on anecdotal information."

Definitive numbers from a telephone survey of enrollees are not expected until next month. So they will be available just as the health care industry debates how much, if anything, to assess insurers for savings they are expected to realize when hospitals and other health care providers start shifting fewer costs onto insurers.

The so-called "savings offset payments" from insurers are a provision of the Dirigo Health reform law passed in 2003. They are set to begin in January, and would be used to subsidize income-eligible enrollees of DirigoChoice.

The law states that insurers cannot be assessed more than 4 percent of insurance revenue as long as Dirigo Health reforms have generated savings.

The fee would apply to paid claims - rather than premiums, a bigger pool of money - according to an agreement worked out Thursday by insurers and the governor's Office of Health Policy and Finance. And money from the fees would not be used to pay administrative costs.

But the method of proving savings from DirigoChoice and other initiatives of the Baldacci administration, such as a past moratorium on hospital expansion, still needs to be determined. A working group is being formed, and will begin meeting in June with the guidance of actuarial consultants.

The working group will make a recommendation on how much to assess insurance companies, but the Dirigo Health board will have the final say.

The telephone survey of enrollees will be completed in time to be part of the discussion, according to the governor's health policy office.

Adam Thompson of that office said the survey, which is being done by the Muskie School of Public Service, has spanned months because it is so work-intensive.

"They're trying to reach every member, and it can sometimes take 15 calls before you can reach someone and go through survey questions," Thompson said.

Future applications for DirigoChoice will directly ask whether people, and their dependents, were previously uninsured, Thompson said.

Of those enrolled so far, 4,095 are employees from 483 small businesses; 1,276 are self-employed; and 995 are individuals who are unemployed or whose employers do not offer health insurance. The figures include dependents.

The Governor's Office says it hopes to see 31,000 people enrolled by year's end.

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