Buyer Beware! Considerations for Small Businesses Examining Governor Baldacci’s DirigoChoice Health Plan

Read the full reportON JANUARY 3, 2005 Governor John Baldacci announced disappointing results for the first three months of DirigoChoice sales. Enrollments are far below original projections, and employer contributions are critical to Dirigo’s shaky financial underpinning. Although the Governor and Dirigo Health will begin another marketing campaign in hopes of convincing others to sign up, the projections of 31,000 people enrolled in the program by December 31, 2005 seem highly unlikely. Maybe employers are not signing up because they understand the following five disappointing facts about DirigoChoice:

1. The cost of offering DirigoChoice to your employees is significant.

Small employers are required to pay a minimum of 60% of the employee-only premium for the employer (about $2,231 annually for each employee), regardless of what level of health coverage employees chose for themselves and their families (employee-only, employee and spouse, employee and children or family coverage).

2. The complexity of DirigoChoice is six times that of traditional employer-provided health benefits.

Rather than small employers having to just understand and consider the four different levels of coverage, the DirigoChoice benefit plan has various deductibles and employee net costs based on an employee’s household income. However, employers will not know an employee’s household income. They only know the wage and salary information of their own employees. Employees interested in receiving DirigoChoice will have to provide household financial information to the State. Based on this information, they will be placed in one of the twenty-four different DirigoChoice plans. Each plan has a different deductible and a different net employee premium (please see Chart 2: Dirigo Choice Simplification? on page 2). Employers will not know what plan any given employee is in, as knowing such would reveal confidential information about that employee’s household.

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