• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Maine Health Reform Plan Creates Philosophical for Insurers, State Officials

Posted on: Tuesday, 25 October 2005, 00:00 CDT

By Josie Huang, Portland Press Herald, Maine

Oct. 25--AUGUSTA -- Health insurance companies call it a tax. The state uses "savings offset payment."

Deep philosophical differences have formed over an upcoming fee on insurers.

The assessment, designed to match savings resulting from the state's Dirigo Health reform plan, will be used to help pay for one of its key initiatives: the DirigoChoice insurance program.

The law states that the fee cannot exceed the actual savings, but that amount is in dispute. The Dirigo Health agency sets the number at $136.8 million -- largely due to most Maine hospitals voluntarily capping their costs and operating margins.

But attorneys for the insurance industry said at a public hearing Monday that number is inflated based on faulty data and could force companies to raise premiums by up to 4 percent. That prospect has the state's business community rallying to insurers' side.

"The bottom line is we have some very big questions," Bruce Gerrity, a lawyer representing health trusts for bankers and auto dealers, said during the all-day hearing. Also present was the Maine State Chamber of Commerce, Maine Association of Health Plans and Anthem Blue Cross Blue Shield of Maine, the state's largest private insurer.

But consumer group Maine People's Alliance said insurers are making excuses to increase premiums.

Without the fee, "all the savings will go directly to the pockets of wealthy insurance companies and their CEOs," Todd Ricker, an alliance member, said during a press conference held outside the hearing.

It will be up to Insurance Superintendent Alessandro Iuppa to determine the actual savings. His decision is due Saturday, after hearings Thursday and Friday.

Hanging in the balance is the budget for the state-sponsored DirigoChoice.

Most of the money from the fees would be used to provide discounts to income-eligible participants after a one-time appropriation of $52 million runs out late in the spring. A portion will help fund the Maine Quality Forum, the state's quality watchdog group.

The board of directors overseeing DirigoChoice will use Iuppa's decision to determine the exact fee. Not only can the fee not surpass proven savings from Dirigo Health initiatives, it cannot amount to more than 4 percent of paid claims. That was roughly $50 million in 2003 -- still more than the $35.7 million that insurers and employers had once suggested Dirigo Health has saved.

During Monday's quasi-judicial hearing, attorneys representing the insurers tried to poke holes in the state's figure, saying consultant Nancy Kane of Harvard University's School of Public Health overestimated the $70-million plus in savings associated with hospitals reducing costs and operating margins.

Under cross-examination, Kane acknowledged a miscalculation of more than $6 million and said she would have liked to have more time to review the data.

But she and other consultants indicated that some error did not invalidate their very conservative estimates.

They also countered claims that savings had little to do with Dirigo Health and more to do with cyclical fluctuations in the health care system.

"There is a major change in trend and it's associated with Dirigo. I don't see anything else in the same magnitude as Dirigo," said Kenneth Thorpe, who chairs the department of health policy and management at Emory University in Atlanta.

Other Dirigo Health initiatives include limits on hospital expansion and the expansion of Medicaid, which is seen as a way to prevent people from incurring bad debt or charity care.

The state has said that insurers should be able to absorb the fee by negotiating lower rates with hospitals and other health care providers.

But Katherine Pelletreau, executive director of the Maine Association of Health Plans, said insurers do not have the leverage in a rural state like Maine, where hospitals hold monopolies over entire regions.

-----

To see more of the Portland Press Herald, or to subscribe to the newspaper, go to http://www.pressherald.com.

Copyright (c) 2005, Portland Press Herald, Maine

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: Portland Press Herald

More News in this Category