Within days of citing cost concerns and putting a hold on new enrollees, Maine's Dirigo Health now predicts it will save the state's healthcare system $92.7 million in its third year of operation.
On 1 July, Dirigo Health stopped taking new members, stating the need to cut costs. Small businesses and self-employed people were given an additional 60-days, cutting off enrollment on 1 September. Dirigo recently won its court case over the much-contested savings offset payment (SOP) funding mechanism, securing $34.4 million from insurance companies, but Governor John Baldacci (D-ME) cut the requested additional $16.3 million from the state's current budget, causing Dirigo executives to claim they could only remain operational through the fiscal year beginning 1 July.
The savings calculation is the starting point from which the SOP is determined. The payment is an assessment made on insurers based on savings created by Dirigo through its enrollment of members -- currently only 14,400 Mainers and no where near Dirigo's first-year enrollment target of 31,000 uninsured, let alone 130,000 by 2009. Insurers argue that the majority of Dirigo members previously had insurance and that the plan is not meeting its legislated goal of reducing the number of Maine's uninsured.
A hearing before the Dirigo Health board of directors, scheduled for 23 July, is the next step in determining the SOP.
Last year, Dirigo calculated that the plan resulted in close to $100 million in savings. The Dirigo board reduced that figure to $41.8 million and the insurance superintendent reduced it to $34.3 million.
BLOG Medicine volunteers to check Dirigo's math, because these numbers continue not to add up. When Dirigo claimed the $100 million savings the plan had approximately 7,000 members. Now, with 14,400 members and crying poverty, Dirigo claims another, seemingly miraculous, $93 million in savings, that, just in the nick of time, would allow the plan to keep its doors open after next year. If these savings numbers are even remotely accurate, Dirigo membership must only consist of high-cost catastrophic cases.
If, instead, Dirigo's paltry membership is more broadly based (i.e., the risk pool consists primarily of young, healthy members), then the SOP calculation starting point cannot feasibly be accurate. However, if Dirigo membership does, in fact, consist primarily of the elderly and severely ill, then Maine legislators have further compounded their financial malfeasance by allowing Dirigo to self-insure, as signed into law by Baldacci in May 2007.
Regardless, on 1 July 2007, 4 years into the experiment of state-sponsored health insurance, Dirigo Health proved it was neither self-sufficient nor financially sound by closing enrollment. The State of Maine has proved, beyond any reasonable doubt, that it does not belong in the health insurance business. No inflated claims of unrealistic, unsubstantiated savings should cloud anyone's perception --this emperor has no clothes.■