Reform will bring more choices, better rates
By Rep. Mike Willette
(R-Presque Isle)
Let’s say you could pay $27,000 for something or $11,000 for the same thing.
Which would you choose? Both numbers represent the cost for a year’s worth of premiums for a health insurance policy for a family of five. These policies come with a deductible of $1,750 for individuals or $4,500 for a family. Both policies are offered by the same company. Why are the costs so different?
The more expensive policy is what a family of five pays in Maine; the lower amount is what a family of the same size pays for an identical policy in New Hampshire. Now, before you call your insurance agent to complain about being ripped off, let me explain why this is and what we in the Legislature have done about it.
In the mid-1990s, the Legislature implemented changes to the health insurance market that led to a mass exodus of insurers. Before these “reforms,” Maine had 19 different carriers offering health insurance. Today, we have only a handful, and competition has virtually disappeared.
The attempt to protect Maine’s most vulnerable residents from rising health insurance rates has caused huge increases for the insurance market as a whole. Maine is now one of the most expensive places in the nation to buy coverage. The new regulations forced insurance carriers to price policies as if every Mainer was “high risk.”
Due to the exorbitant cost, we have an alarming lack of participation by younger and healthier Mainers. These individuals are needed in the insurance pool to keep premiums down for everyone. Nonetheless, a 20-year-old Mainer must pay $718 a month for a policy that costs a 20-year-old New Hampshire resident just $190. Such extreme disparities help explain why 133,000 Mainers have no health insurance.
LD 1333 is landmark legislation intended to revamp Maine’s health insurance market. This bill is designed to generate more competition and more choices to bring rates closer to national norms. One prominent feature allows individuals to purchase health insurance from companies licensed in other states. Specifically, it permits carriers authorized to sell insurance in Connecticut, Massachusetts, New Hampshire and Rhode Island to sell their individual policies in Maine. During the 2010 election, one resounding request from voters was to be allowed to purchase health insurance across state lines. This bill does just that.
At the heart of the reform is the Guaranteed Access Plan (GAP), a reinsurance fund financed by an assessment of $4 per month on all privately insured Mainers. The GAP will allow chronically ill individuals and those with pre-existing conditions to buy into the same health plans as everyone else at the same cost as a healthy individual. To keep their premiums affordable, the state will provide subsidies from the reinsurance fund to make sure they pay no more than a healthy individual in their age group. Moreover, Maine laws on “guaranteed issue” and “guaranteed renewal” remain in place. No insurer can kick you out if you get sick.
Another major part of LD 1333 is the repeal of something called Rule 850. This rule allows individuals to seek health care regardless of location, and it forces insurers to pay for that care even if they have not contracted with the doctor or hospital where the care took place.
Rule 850 is one of the reasons why Presque Isle residents’ health insurance premiums can range from 30 percent to 50 percent higher than premiums in Portland. With the repeal of Rule 850, you may still seek care wherever you wish, but the repeal will enable insurance providers to offer incentives to people who seek major care someplace cheaper.
For example, if you needed a procedure that would cost $20,000 in Presque Isle, but $12,000 in Bangor, your insurance company could offer you incentives to travel to Bangor for the less expensive option. They might pay for your mileage and/or knock off some of your deductable, thus making it financially advantageous for both parties. However, you could still get the work done in Presque Isle if you so chose.
Most people I know have to travel for treatments anyway due to the lack of services in our rural areas. Arguments against the repeal of Rule 850 fall flat when you consider that in 2005, the Maine Legislature voted to exempt themselves and all other state employees from Rule 850. It was touted as a huge cost saving measure to the state, and it has proven to be so. Many state employees in rural Maine have this health insurance and have had no problems with being “forced” to travel for care.
It should be noted that 14 current Democratic members of the Legislature voted in 2005 for that exemption from Rule 850. Some of these same folks have been the most vocal opponents of LD 1333. Why was it a good idea in 2005, but not now when it could benefit all Mainers, not just state employees?
On the business side of things, companies with fewer than 50 employees will be allowed to band together to create larger insurance pools. By distributing risk over a greater number of people, rates would be expected to decline. For companies with 20 or fewer employees, the plan also creates a tax credit if wellness programs are maintained. The associated credit would range from $100 per employee to a maximum of $2,000.
Before closing, it should be noted that this bill was crafted to mesh with the federal Affordable Care Act (ACA) in the event the law survives court challenges. If the ACA is struck down, the plan provides a structure that lowers costs, expands choices and moves Maine into the American mainstream.
I am proud to have voted in favor of this legislation. With LD 1333 we are breaking out of the cold, hard mold that the state had cast itself into over the years. If you wish to discuss the bill with me, please call or email anytime.
Rep. Mike Willette (R-Presque Isle) serves on the Veterans and Legal Affairs Committee.
