Both sides misleading public on Beverage Tax-Dirigo Health issue

published in Kennebec Journal Thursday August 7, 2008 by Dan Billings In November, Maine voters will decide whether to veto a package of taxes passed to fund Dirigo Health, Maine's subsidized health insurance program. Veto proponents claim the vote is about high taxes. Veto opponents claim the vote is about affordable health care. Neither claim is true. Dirigo is available to Maine small businesses, the self-employed and individuals. Dirigo was intended to provide affordable coverage for Maine's approximately 140,000 uninsured. But after five years, Dirigo's actual enrollment is only only about 12,300 -- well short of the program's first-year goal of providing coverage to 31,000 Mainers. Since its passage, Dirigo has been funded through the so-called Savings Offset Payment. Through a complicated, expensive and contentious process, the Dirigo Health Agency estimates the savings to Maine's health care system resulting from Dirigo. The entire value of the savings, or as much as 4 percent of paid medical claims -- whichever is less -- must be paid by health insurance carriers and administrators. Four percent of paid claims for 2007 is estimated to be $80 million. The amount of the Savings Offset Payment is set each year by the insurance superintendent. Through Dirigo's history, the amount set by the superintendent has been less each year than the amount sought by the Dirigo Health Agency. The payment was $43.7 million in 2004; $34.3 million in 2005; and $38.2 million in 2006. The limited funding has capped Dirigo's growth and frustrated Dirigo supporters. Recently, the Dirigo Health board voted that the amount saved in Maine's health-care system in 2007 due to Dirigo was $149.8 million. If that figure is accepted by the insurance superintendent, the Savings Offset Payment for the coming year would be set at the maximum level of 4 percent of claims and bring in about $80 million. Since the level of the Savings Offset Payment was last set, Gov. John Baldacci appointed a new insurance superintendent, Mila Kofman. She testified in favor of Dirigo's passage and is expected to set the Savings Offset Payment at the maximum level. To eliminate the problems with the Savings Offset Payment and to provide stable funding for Dirigo, the Legislature passed a package of taxes this year to replace the controversial payment. The package includes a new wholesale tax on soda, flavored water, sports drinks, syrup and other beverages; a doubling of the tax on beer and wine; and a new fixed 1.8 percent tax on insurance claims. Dirigo supporters claim that this package will bring in $57 million per year while opponents of the new taxes claim the package will bring in $75 million per year. The businesses targeted by the taxes quickly organized a people's veto effort to bring the taxes to voters. An effort paid for primarily by beer and soda bottlers collected 75,000 signatures that are under review by the secretary of state. With a cushion of more than 20,000 verified signatures, the effort is almost certain to result in the veto being on the November ballot. Though the campaign is just beginning, the battle lines have already been drawn. Veto proponents focus their argument on taxes. They call their coalition "Fed Up With Taxes" and say that the issue is taxes and raising taxes during tough economic times. Veto proponents hope to attract voters frustrated with Maine's tax burden and those nervous about the economy. Veto opponents focus their argument on health care. They call their campaign "Health Coverage for Maine" and claim affordable health care for 50,000 Mainers is put at risk by the veto. They hope to attract voters concerned about the cost of health care and health insurance. Neither campaign is being honest with voters. The truth is that if the new taxes are vetoed, the Savings Offset Payment will remain in effect to fund Dirigo. The payment, which is a tax given another name, will bring in approximately the same amount as the taxes targeted for veto. As a result, neither the funding for Dirigo nor the amount of taxes Mainers pay is at issue. Dirigo will be funded and Mainers will pay the same in taxes no matter the result of the veto vote. In reality, the only thing at issue is how the taxes to fund Dirigo will be collected. So what should a voter do when both sides of a referendum campaign spread misinformation? My advice is ignore them. The people's veto is the least consequential contest on the ballot. Your time is better spent on the other choices to be made in November. Dan Billings is a Republican activist and commentator. He practices law in Waterville. He can be reached at dib9@aol.com.