An insider’s view of health care situation

12 years ago

An insider’s view of health care situation

To the editor:

    Over the past 15 years as a health insurance broker, I have seen a steady increase in the cost of coverage. The legislature has passed many addendums to the laws that, while helping to secure the guaranteed issue of policies and disallowing medical questions to be asked, have caused Maine to be at a competitive disadvantage.

    In 1996, an individual could purchase insurance with a low deductible, copays for doctor visits and a drug card, for about $120 to $200 per month. There were as many as six companies selling these policies. As these laws came into place over the ensuing years, the price for these policies doubled and then tripled. Eventually, the declining enrollments and the “Maine Only” plan designs caused all but one company to leave the state. An executive for one national company told me 10 years ago that they have to maintain a 48-state plan design and then one that covers Maine and one other region. At this point we had moved so far from the norm that most states operated under, we were doomed to have problems.

    Maine had set up a scenario that could not be made to work, under any circumstance. The health insurance market was only a viable place for an individual who needed extraordinary health costs paid for because of illness. No one else could afford the premiums. It would not take a rocket scientist to figure out what happens when you sell very few policies and only to people who are sick — costs go out of sight.

    I would see on a daily basis individuals and families who could not afford to purchase health insurance. Costs were simply too high and there was no choice of companies. Market forces don’t work when only one company sells insurance.

    This fact has also caused people to not buy other needed financial products like life insurance, disability insurance and retirement savings plans. They could not afford to do anything more than just the health insurance portion, if they could even do that.

    This reality has repercussions on society that are yet to impact us. It will surface as these Maine citizens begin to retire and have no extra savings or if they have an untimely death and their family loses their home for lack of life insurance. The Maine insurance broker community has tried in vain for the past decade to have the politicians in Augusta to recognize these problems and address them. The powers in Augusta which have traditionally been controlled by the Democrats have not responded.

    Dirigo was enacted to help costs but was totally unsuccessful in doing this. The program was very cumbersome and made employers responsible for much added paperwork and information. Mostly, the premiums were not any less expensive than what was commercially available. When you have the choice to participate in a plan that costs the same and adds extra work, why would you? To demonstrate that this is true the program never gained any meaningful enrollment. If it was any kind of a deal employers would have flocked to it … they didn’t. Governor Baldacci and his commissioners, along with the then legislature beat this dead horse until the bitter end.

    Once the election in 2010 changed the balance of power in Augusta, the start of talks to reform the health insurance market began to take shape in earnest. This resulted in crafting the law we now know as PL90. Upon enactment the leaders of the House and Senate pledged that this would be a work in progress. They admitted that it would start the ball back in the direction of competition and choice of companies, but they also recognized that because of the complexities of this market it may have unintended consequences.

    It did have one consequence that was quite negative for northern Maine. The rates charged by region could be varied. Many Aroostook businesses had 50 percent rate increases and were drastically affected by this law; consequently southern Maine businesses saw 10 percent to 20 percent rate decreases. This was not a desired result. Because of this situation the creators of the law have introduced and have passed a revision. This change which will take place as of Oct. 1, 2012, and will make it illegal to charge rates based on region. This will make northern and southern Maine have the same rating factor and will make the premiums adjust downward in Aroostook, while making southern businesses relatively more expensive. This should result in a much better pricing structure once companies see renewal of their plans in the third quarter of 2012 and in 2013.

    On the brighter side this law had a drastic and beneficial effect on individuals because it allowed for varying price by age. The old laws only allowed a health insurer to vary the prices charged by 1.5 times from the youngest to the oldest. The new law allows this number to be 2.5 times and will increase to 3 over time.

    Some legislators and most notably for Aroostook County, John Martin and Troy Jackson, were very vocal that this would end up as a way to make our older citizens in the 55 to 64 age range pay much higher premiums. Well boys, you were wrong. When the new rates were published after the enactment of PL90 for July 1, 2012 everyone saw a decrease in rates. Here are some examples: Old prices $2,250 deductible at ages under 30 $527.24 per month. New prices $2,000 deductible age 0-18 $204.23, 19-24 $215.23 and 25 to 29 $233.14 all well less than half the old price. Even the 55-plus age went from $790.86 to $525.34 age 55-59 and $645.37 age 60-64. This represents a more than 30 percent decrease for age 55-59 and an over 20 percent decrease for 60-64. In all cases, the rates for an age bracket have dropped as a result. Now that it can be shown in black and white that this is a move in the right direction we need to make sure that the next enhancements to the law are also allowed to take effect.

    The next changes to the law will create a high risk pool to help our most sickly citizens to secure coverage at an affordable price, allow the rate band to increase to a 3 to 1 ratio, allow changes to underwriting to encourage competition back into the marketplace so we don’t have just one choice of insurance company and allow Mainers to buy insurance over state lines. Once these items have been fully enacted Maine will be able to compete in the health insurance market. This change will make both businesses more competitive and help individual to secure their financial futures.

    PL90 is not a perfect law, but it has opened the door to positive change. Now that ears are open we must continue to support positive enhancements to the law, and I hope you will join me in thanking the following northern Aroostook Legislators in allowing this to happen. Sen. Roger Sherman, Rep. Alex Willette, Rep. Michael Willette, Rep. Bernard Ayotte, Rep. Peter Edgecomb, Rep. Tyler Clark, and Rep. Joyce Fitzpatrick.

Craig R. Green

Presque Isle