Maine voters rejected a beverage tax in November designed to replace the current funding mechanism that supports the Dirigo Health Program.
The Dirigo Health program was established in 2005 to offer an affordable health plan to small businesses and low-income uninsured workers and their families. Through a public–private collaboration between the state and Harvard Pilgrim Health Care, eligible enrollees receive discounts on the monthly premiums and reductions in deductibles and out-of-pocket expenses based on income and family size.
Dirigo has been funded by a controversial 'savings offset payment' (SOP), a fee on insurance carriers of up to 4 percent of paid health claims per year (on average 2.1%). The SOP is determined annually by the Dirigo Health Agency Board of Directors, based on a determination by the Superintendent of Insurance verifying the savings that have accrued from the wide array of Dirigo Health reform strategies. Such strategies include hospital voluntary targets on costs, rate regulation in the small group market, constraints on capital expenditures, and savings to the health care system resulting from fewer uninsured and underinsured residents. In December, the Dirigo Health Agency recommended the year four SOP to be $42.1 million, which translates into a 2.14 percent assessment on paid claims; by law it cannot exceed the savings from Dirigo initiatives or 4 percent of paid claims, whichever is less. But Dirigo enrollment is frozen, and the SOP is regularly challenged in court by the insurance industry. [4]
The referendum rejects legislation that would have charged a tax on beer, wine and soft drinks and converted the SOP into a fixed 1.8 percent assessment on insurance claims. [5] As a result, Maine will retain its current 'contentious' SOP funding mechanism for Dirigo Health and the state cannot move forward with a planned reinsurance program for the individual insurance market, according to Trish Riley, director of the Maine Governor's Office of Health Policy and Finance.
Governor John Baldacci hopes, however, that under the incoming Obama administration, Maine could get federal Medicaid dollars to match Dirigo premiums paid by employers and individuals, which would help sustain and expand the program. This federal match was originally intended for the program but was rejected by the Centers for Medicare and Medicaid Service (CMS) and is now under appeal.
According to Riley, the November referendum rejecting the new beverage tax was less a message about health care than about taxes. 'After a $4 million campaign by the beverage industry called 'Fed Up with Taxes,' and at a time when gas prices were at their highest and the economy was falling, the ballot was an opportunity to vote ‘Yes, I'm fed up with taxes!' Riley says.
References [1] Montana SCHIP enrollment was 17,240 and Medicaid enrollment for children was 46,645 in November 2008. Approximately 31,000 (14%) of all Montana children are uninsured according the 2008 U.S. Census Bureau Current Population Survey, based on the three-year average (collected 2006-2008).
[2] The eligibility cut-off between Medicaid and SCHIP will depend in part on the details of the SCHIP reauthorization by the U.S. Congress, expected in early 2009.
[3] The SCHIP expansion applies only to children not covered by private insurance for at least three months, ineligible for Medicaid, and who are U.S. citizens or qualified aliens and state residents. The plan stipulates that eligibility may be reduced if funding is insufficient.
[4] Enrollment is frozen, except for new dependents for existing members, new workers for currently participating employers, and applicants who do not need subsidies. About 11,000 members and 621 small groups are currently enrolled.
[5] 64.3% of referendum voters chose "Yes" to veto Public Law 629, legislation enacted in June 2008 that amended the Dirigo Health Program statute to replace the Savings Offset Payment with funding from 1) a health access surcharge of 1.8% on paid insurance claims; 2) an increase in excise tax on malt beverages and wine; and 3) a new tax on syrup for soft drinks and bottled soft drinks. According to Riley, the legislation reflected a compromise developed over four years of negotiations.
« Previous
Next »