A survey just completed on the first round of people who signed up for subsidized insurance under Dirigo Health shows 62 percent were previously insured – raising the question of whether the program is reaching its targeted audience of the 130,000 uninsured in Maine.

Many of those previously insured people are so poor, however, they were buying high-deductible plans that essentially left them under-insured, according to Trish Riley, the head of the governor’s Office of Health Policy and Finance.

“Those under-insured, who are very low income, for all practical purposes they are uninsured,” Riley said. “They’re afraid to go the doctor,” because of out-of-pocket expenses, and “they’re contributing to bad debt and charity care.”

Survey results show 40 percent of the previously insured had deductibles that were greater than $2,500, with the lowest income individuals most likely to have the highest deductibles in order to save money. Using income levels just above the federal poverty guideline, that meant some individuals were paying 25 percent or more of their income on health care.

“It confirms that the greatest problem in Maine is the substantial number of under-insured,” said Dr. Robert McAfee, chairman of the Dirigo Health board of directors, which reviewed the survey on Monday. “Some will focus on the statistic that many of those who joined DirigoChoice in the first three months had been previously insured. But, it’s important to look beyond the numbers to the people – many of whom had insurance in name only.”

That argument, however, didn’t wash with Republican legislators, who have been increasingly critical of the program and see it as a way to discredit Democratic Gov. John Baldacci.

“There’s got to be a better way and there is,” said Sen. Carol Weston, R-Waldo, the assistant minority leader. “This was to insure the uninsured…Now they’re saying under-insured. Well even those on Dirigo have pretty hefty deductibles. Whose definition of under-insured are they using?” she asked.

Rep. Kevin Glynn, R-South Portland, who sits on the Insurance Committee and is a vocal critic of DirigoChoice, said, “This represents an abysmal failure of the program and calls for a redesign.” The enrollment of previously uninsured is “not what the governor and Trish Riley’s office had promised us, which is to insure 31,000 people in the first year, who previously did not have health insurance.”

“Even with it missing all these targets, Mainers are still going to be hit with a tax to support this program,” Glynn said. “The Legislature has to overhaul this program. We stand ready to assist.”

The picture the survey paints is incomplete since it only involved 1,564 participants, who enrolled in the first quarter of this year. The Muskie School, which is doing the survey for Riley’s office, will continue to try and get information on all 8,100 people currently enrolled in DirigoChoice. Going forward the state will require insurance history from those who sign up – something that wasn’t demanded previously.

The survey also counts as uninsured people who were uninsured sometime during the previous year or had temporary coverage through COBRA – a methodology Weston said is misleading.

Republican legislators have been calling for the insurance history, saying DirigoChoice was getting a lot of switch business, in part, because it is heavily subsidized by the state.

Deductibles under DirigoChoice are $1,250 or $1,750 for individuals and $2,500 or $3,500 for families, but discounts are offered on a sliding scale, based on a person’s income. Individuals just above Medicaid-eligibility, for example, pay no more than a $250 deductible and their share of the premium is also subsidized 80 percent by the state.

Whether the program is reaching the uninsured and therefore cutting back on bad debt and charity care will be important in the calculation of how much DirigoChoice is actually saving in health care costs.

Those savings, coupled with voluntary caps on hospital spending, will be used to justify up to a 4 percent assessment on claims paid by private insurance companies and self-insured businesses to raise money to fund DirigoChoice going forward. There is nothing to prevent that assessment from being passed on to consumers.

The program was started with $53 million in one-time Medicaid money, and it is estimated it will need $48 million in additional funds once it hits 31,000 enrollees.

“For the amount were spending and the new tax that’s coming, we should and could do it better,” said Weston, who would like to see a “smorgasbord” of options for Mainers from tax-deductible health savings accounts to permission to buy policies offered in other states. “I think we could do much better than start an entitlement program that eats up money as fast as Dirigo has.”