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July 11, 2005

A little help | A Franklin County program that subsidizes part of employers' cost for DirigoChoice attracts its first enrollees

By Sean Donahue
Ken Sparkes' goal this year was to offer health insurance for his one full-time employee at Sparkes Hearing Services, Linda Myhaver. But as the owner of a small Farmington audiology service, which provides hearing aids to customers in Franklin County, he estimated that he could only spend about $200 a month for his portion of the premiums.

When he looked into DirigoChoice health insurance, among other options, he found its premium would just exceed his $200 target, but he decided to buy it because it offered Myhaver good coverage at a reasonable price.

Then Sparkes learned from his insurance agent about a new subsidy program that would refund him 20% of his premium costs this year and 10% next year. "Now that we have [the subsidy], I'm certainly thankful for it," says Sparkes. "It's a nice bonus."

Sparkes Hearing Services is the first company to sign up for the DirigoChoice Incentive Program, launched in April by the Franklin Community Health Network and the Greater Franklin Development Council. Using a $375,000 grant from an endowment used to support health programs for the uninsured, FCHN hopes to encourage Franklin County small businesses that did not previously offer health insurance to sign up for DirigoChoice ˆ— thereby increasing the number of county residents covered and, in turn, potentially decreasing health care costs in the area. (For more on DirigoChoice, see "Picking up the tab," p. 27.)

By the end of the year, when enrollment for the subsidy program ends, FCHN hopes to have 1,200 new individuals covered under the DirigoChoice plan, while helping their employers pay for their portion of the premiums. "Businesses that provide health insurance tend to be healthy businesses ˆ— not just physically healthy but their bottom lines tend to be healthier, too," says Leah Binder, vice president of FCHN. "They have fewer problems with employee recruitment and retention and are more embedded in their community."

That potential economic development impact is what attracted GFDC's board of directors to sign on as administrator for the program, says chairman Mike Luciano. "We know small businesses struggle to provide these benefits," says Luciano, chairman of the GFDC board, "so this program fits into our mission to help attract business and help employers who are here already."

The check is in the mail
The two organizations hired local attorney Tom Dean to manage the application process. As of late June, six small business with a total of 12 employees had signed up for the incentive program, according to Dean.

Inquiries and applications began coming in more frequently after the groups launched a radio advertising campaign in mid-June, Dean says, so he expects to enroll more businesses in the coming months. "We'd all like to see all the funds used, and there's time for that, because the program takes new applicants through year-end," he says.

To qualify for the program, businesses with between one and 50 employees ˆ— which haven't offered health insurance to their employees for at least the previous 12 months ˆ— must first sign up for DirigoChoice insurance. Then, those employers fill out an application with Dean that sets them up with the incentive program. Once that application is filed and the employer starts paying its premiums, it can start sending vouchers to Dean to receive monthly reimbursements for 20% of those premium costs this year and 10% next year.

For Ken Sparkes, this year's monthly rebate is about $45, he says. And while that subsidy helped bring his payments back below his $200 target, he believes the bigger benefit might be less immediate than a check in the mail. By making it easier to commit to the fixed cost of providing health insurance, the program could help him and other businesses avoid the expenses associated with employee retention and recruitment. "I have done the one person to another person every six months or year, and you have the same training period and learning curve," says Sparkes. "I can't repeat that constantly."

Picking up the tab

Questions about the Dirigo Health Act's costs and effectiveness flared again recently at the end of the legislative session in June, as lawmakers took up a key issue in determining Dirigo's future: How to continue funding the program.

At the center of the controversy is Dirigo's "savings offset payment," which is a fee ˆ— or assessment ˆ— the state will collect from private insurance companies and self-insured businesses to help fund the DirigoChoice insurance plan. The level of the assessments will be equal to a percentage of savings generated in Maine's health care system from the reforms of the Dirigo Health Act. If the state determines there were no savings, then there would be no payment demanded.

But the June debate on a bill that tweaked the way assessments will be calculated offered a fresh opportunity for some critics ˆ— including lawmakers, health industry professionals and business groups ˆ— to question the approach.

"I think the concept is a little bit of double-speak," says David Clough, Maine director of the National Federation of Independent Business. "If the state is assessing insurance companies for an amount equal to the level of savings, it means [those companies] can't realize those savings. It will in effect zero out for them."

Critics worry that insurance companies will pass the assessment cost along to consumers. But Trish Riley, director of the Governor's Office of Health Policy and Finance, is adamant that the assessment is not a tax that will increase insurers' cost of doing business in Maine. She cites several checks and balances built into the system, such as limiting assessments to four percent of claims paid by each insurance company and self-insured business.

Riley also argues that the savings offset is an investment to help slow the growth of health care costs in Maine. "Premium payers are paying now for bad debt and charity care [related to uninsured patients]," she says. "It makes sense to reinvest savings [from Dirigo's reforms] back into the system and toward increasing coverage in Maine."

Insurers operating in Maine are adopting a wait-and-see approach. Aetna spokeswoman Wendy Morphew said it's too soon for her company to comment on the potential impact of the savings offset, but that the company is following the state's efforts to determine payment levels. "We expect to be very engaged in helping shape that policy," says Morphew. "But the issue would still be that it's important to see if there are savings realized."

Insurers, as well as Dirigo's supporters and critics, can watch a just-launched process to answer that question. On June 30, the Bureau of Insurance convened the first meeting of a working group ˆ— made up of five representatives from the business community and insurance market, and five representatives from Dirigo Health ˆ— to advise the Dirigo Board of Directors on how to determine savings and calculate offset payments.

The Dirigo Board is obligated to seek an adjudicated hearing from the Bureau of Insurance in September to determine if, indeed, savings can be documented and to set an appropriate assessment level. Those payments are scheduled to start in January 2005. "It's not in our interest to have a savings offset payment that isn't credible," says Riley, "I think the fact that we can sit together and work this through is positive."

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