Dirigo Savings Claims Exceed Credibility

By Dana Connors, President, Maine State Chamber of Commerce and Katherine Pelletreau, Executive Director, Maine Association of Health Plans

Here we go again. The Dirigo Health Agency (DHA) has again come up with an outlandish and unreasonable claim of savings in Maine’s health care system as a result of the subsidized Dirigo Health program.

This year it’s really off the charts. The DHA initially claimed $190.2 million in savings—more than twice what it claimed last year. But it doesn’t stop there. The DHA’s Board found $149.6 million in savings – nearly twice the amount of savings found by the Board and nearly five times the final amount of $32.8 million approved by the Superintendent of Insurance last year. This despite the fact that DirigoChoice is serving fewer members now. You heard that right…the DHA claims it has saved nearly five times as much as approved last year, even though there are fewer people covered by Dirigo! It defies logic!

The deep flaws in the funding for the Dirigo Health program have never been more apparent – or more troubling.

If those outlandish savings, or something close to them, are approved by the Superintendent of Insurance, the over 700,000 Maine people covered by private health insurance will likely subsidize the Dirigo Health program at more than double the rate they do now. That is unacceptable.

Doubling the SOP – which is likely if this absurd estimate is accepted – will force some employers to make changes in their health insurance benefits or drop coverage all together, resulting in more Maine people being uninsured, which is the opposite of Dirigo’s intent.

Just how absurd are those claimed savings?

• When applied to other states, the methodology used by the DHA shows that Dirigo Health has created savings in 29 other states – states that don’t even have the Dirigo Health Program. How can Dirigo produce savings in states where it doesn’t exist? For example, Dirigo has “saved” the State of California over $1 billion dollars, even though there is no such program in California.

• The DHA’s methodology gives Dirigo Health credit for reductions in bad debt and charity care that occurred before the Dirigo Health program was proposed and before it began providing coverage to anyone.

• The savings claimed for Dirigo’s reductions of bad debt and charity care are more than four times those approved last year, even though DirigoChoice covers 3,000 fewer people than it did last year.


Equally troubling is the fact that the Dirigo law provides no clear standards of how to measure the savings. Allowing DHA to create new and different standards and categories every year is fraught with problems and undermines the credibility of the process and the result. The law is unconstitutionally vague and improperly delegates to the agency the role of defining the standards. This leaves those subject to the agency’s regulation in the position of having to guess at the standards each year. This a fundamental flaw in the law that will plague this process every year until it is changed.

We do not dispute that there have been some savings in Maine’s health system attributable to the Dirigo Health program. But the savings seen by our members are nowhere near what the DHA is claiming. The DHA is taking a “shoot for the stars, but hope for the moon” approach in trying to fund a program that, up to this point, has fallen far short of expectations with just over 12,000 people enrolled.

Now the people of Maine, and the Maine businesses that employ those people, must rely on the new Superintendent of Insurance, Mila Kofman, to bring a measure of common sense to this annual exercise and, like previous Superintendents before her, reject the DHA’s faulty methodology and approve an amount of savings that is sound, fair and credible.

No matter what, it is simply wrong to ask Maine businesses and individuals to pay for this program when they are already struggling to provide and pay for their own health insurance.