121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1611
		An Act To Provide Affordable Health Insurance to Small Businesses and Individuals and To Control Health Care Costs
		LR 2137(03)
		Fiscal Note for Bill as Amended by Committee Amendment " "
		Committee: Joint Select Committee on Health Care Reform
		Fiscal Note Required: Yes
Fiscal Note
					Projections	Projections
			2003-04	2004-05	2005-06	2006-07
Net Cost (Savings)
	General Fund		$53,500,000	$500,000	$500,000	$500,000
Appropriations/Allocations
	General Fund		$500,000	$500,000	$500,000	$500,000
	Federal Expenditures Fund		$973,188	$47,487,284	$111,313,873	$161,845,977
	Other Special Revenue Funds		$2,066,756	$101,191,729	$260,850,284	$327,250,067
Revenue
	Federal Expenditures Fund		$973,188	$47,487,284	$111,313,873	$161,845,977
	Other Special Revenue Funds		$0	$62,457,480	$251,537,581	$326,551,591
Transfers
	General Fund		($53,000,000)	$0	$0	$0
	Other Special Revenue Funds		$53,000,000	$0	$0	$0
Fiscal Detail and Notes
	After the initial transfer from the General Fund of $53 million from the funding provided under the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 PL 108-27, the additional costs resulting from this bill are intended to be offset by dedicated revenue generated in the bill.  The bill assumes the operational costs of Dirigo Health -- the premium subsidy payments, the MaineCare eligibility expansions, the new Maine Quality Forum, and necessary administrative costs -- will be offset by dedicated revenue generated from employee and employer contributions, the one-time General fund transfer, ongoing federal Medicaid matching funds, and beginning July 1, 2005, a new assessment to be paid by health carriers, 3rd party administrators and employee benefit excess insurance carriers (referred to in the bill as a "savings offset payment").
	The ability of Dirigo Health to remain financially sound within these funding resources will depend on Dirigo aggressively managing the start up and phase-in of the program to ensure employer participation is maximized. Without continued employer participation, Dirigo Health would increasingly be forced to rely on the health insurance assessment to fund the MaineCare eligibility expansions.
	The specifics -- both costs and financing -- of the bill will depend on actions taken by the new Dirigo Health Board and Dirigo Health Plan over the coming year, with program services not assumed to begin until the first quarter of state fiscal year 2004-05. For the purposes of this fiscal note, it is assumed that approximately 30,000 enrollees will participate in the first year of the plan beginning July 1, 2004, however there is no specific cap on the enrollment specified in the bill so this should be viewed as more of a  management target than a cap.  As provided in the bill, eligible enrollees will be a mix of MaineCare and non-MaineCare eligibles and will participate either as individuals or through employer group plans.  This mix of MaineCare vs. non-MaineCare and individual vs. group is critically important to the costs of this program and its financial viability.
	Because of the importance of the employer contribution as the financing mechanism for both the MaineCare and non-MaineCare enrollees, any reduction in employer participation from assumed levels could also threaten the financial viability of the plan and may require a reduction in coverage -- both in eligibility levels and the benefit plan. For example, the Administration's pricing model assumes slightly more than 80% of MaineCare participants must enroll through their employers for the plan to be financially viable.   In addition, failure of insurance carriers to participate in Dirigo would trigger the bill's provisions regarding creation of a public alternative -- this would require additional approval by the Legislature.
	The assumption that the bill will not have a General Fund impact beyond the initial transfer of $53 million, assumes the Department of Human Services will have in place the ability to uniquely identify the three MaineCare expansion populations in the bill -- childless adults from 100% to 125% of poverty, disabled persons from 100% to 125% of poverty, and parents of "CubCare" children from 150% to 200% of poverty -- and allocate these costs to Dirigo dedicated revenue.  In addition, the ability of the Department to control and appropriately allocate the costs of the current population (up to 100% of poverty) participating in the MaineCare childless adult federal waiver, will be a critical factor in the Administration's assumption that the expanded childless adult population (to 125%) can be included in Dirigo as MaineCare eligible.
	On the administrative cost side, the bill creates Dirigo Health as an independent executive agency and provides for the creation of an "Executive Director of Dirigo Health" position.  The Executive Director is tasked with the responsibility of employing or contracting on behalf of Dirigo Health for professional and non professional personnel or services.  The bill requires that employees of Dirigo Health be subject to the State Civil Service Law.  This fiscal note assumes that other than the Executive Director position, no positions are created at this time.  It is assumed the Executive Director will work with the State Budget Officer to create limited period positions as appropriate, and that any request for permanent positions will be subject to further Legislative approval.  It is assumed funding for all administrative costs of Dirigo will come from Dirigo dedicated revenue -- with one exception, the $374,368 in fiscal year 2003-04 and $374,630 in fiscal year 2004-05 that would be appropriated in Committee Amendment A to the Part 2 budget (LD 1614).
	This estimate assumes the Bureau of Insurance will require additional Other Special Revenue Funds allocations for two new positions and for contracted services to enable it to meet the bill's requirement regarding review of small group health insurance filings, review of Certificate of Need (CON) applications and review of  large group rate certifications. The bill makes no provision for revenue for this purpose, therefore, it is assumed that existing fees and assessments will need to be adjusted to cover these costs.
	The estimate also assumes the Maine Health Data Organization will require additional Other Special Revenue Funds allocations for one new position and the reclass of an existing position to meet its responsibilities under the bill.  The bill makes no provision for revenue for this purpose, therefore, it is assumed that existing fees and assessments may need to be adjusted to cover these costs.
	The bill does not include additional resources for the Department of Human Services for costs it will incur in coordinating the implementation of Dirigo Health.  It is assumed these can be absorbed by the Department utilizing existing resources.
	Any additional costs to the Department of Audit to audit Dirigo Health on an annual basis can be absorbed by the Department of Audit.
	The additional cost to the Legislature in Part G will need to be funded through the Legislature's study budget of $30,000 as funds permit.  Any additional costs to the Department of Defense, Veterans, and Emergency Management resulting from Part G can be absorbed within existing resources.
	The bill also includes a General Fund appropriation of $500,000 in state fiscal year 2003-04 and $500,000 in state fiscal year 2004-05 to restore funding for the MaineCare Physician Incentive Program (PIP).