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Maine Considers New Health Coverage Funding Model

April 15, 2009
Related Topics: Medical Benefits Law, Benefit Design and Communication, Latest News
Maine legislators are considering a proposal that would impose a 2.14 percent surcharge on health care claims to help fund a program that provides state-subsidized health insurance coverage.

The proposed surcharge on claims paid by insurers and third-party administrators, backed by Maine Gov. John Baldacci, would replace a controversial assessment on health insurers that failed to provide enough revenue to fund DirigoChoice, the state-subsidized program offered to small employers and individuals.

The assessment was part of the 2003 law that created the program. However, state legislators replaced the assessment last year with new taxes on soft drinks and beer.

At the time, state legislators said the beverage taxes would raise more money than the earlier assessment and be more predictable. The previous assessment had been linked to savings achieved by insurers from a presumed reduction in provider cost-shifting as more people had coverage.

However, Maine voters in a November ballot initiative repealed the beverage taxes, resulting in the original assessment automatically being reinstated.

Under the latest proposal—L.D. 1005—discussed Tuesday, April 14, by the state’s House Insurance and Financial Services Committee, the 2.14 percent surcharge would apply to claims paid starting October 1.

About 10,000 Maine residents have coverage through DirigoChoice, for which state law requires employers to pay 60 percent of the premium.

How much the program pays of the remaining premium depends on an employee’s income.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail

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