New Dirigo Bill Proposes Cigarette Tax Increase

The Legislature’s Insurance and Financial Services Committee held a public hearing on a new bill that hopes to change the way the controversial DirigoChoice health insurance program is funded. The bill, LD2247, carries the innocuous title, “An Act to Continue Maine’s Leadership in Covering the Uninsured.” The legislation proposes repealing the contentious savings offset payment, or SOP tax on insurance premiums and instead, raise revenues for the program by increasing the cigarette tax by 50-cents per pack and levying a 1.8 percent surcharge on every hospital bill. The DirigoChoice health insurance program currently covers about 14,000 Maine residents, far short of its originally stated goals. The SOP tax has been the target of lawsuits by the business community and opponents have argued since its inception that taxing those with health insurance only adds to the overall costs of policies in Maine. Legislative Republicans and Governor Baldacci have voiced their concerns over the bill because of the tax increases it contains.