This story was corrected at 11:15 a.m., May 3, 2011, to reflect that Maine currently has three companies that offer insurance on the individual market.


AUGUSTA — Republican lawmakers are pushing ahead on an ambitious bill that would overhaul Maine’s health insurance system and create a new one designed to foster more competition.

In a party-line vote Friday, seven Republicans on the Legislature’s Insurance and Financial Services Committee endorsed the legislation, despite Democrats’ objections that the GOP was “ramrodding” the bill through the committee without giving lawmakers time to consider its implications.

The Legislature may vote on the bill as early as Thursday, said Rep. Wesley Richardson, R-Warren, who sponsored the bill, LD 1333. The bill was amended extensively to transform it into the Republicans’ major health-care reform package of the session.

The bill would open up the individual and small-group insurance market to competition and lower health insurance premiums, Richardson said.

“I’m looking to create a market we can all join in on and make it work for everybody,” he said.

Rep. Sharon Treat, D-Hallowell, the lead House Democrat on the committee, said the state Bureau of Insurance has yet to determine the bill’s impact on people or whether it is financially realistic. She said Republicans are recklessly advancing a bill that would have unknown consequences.

“This is a bill that will completely upend our entire insurance system as we know it,” she said. “I think it deserves a little more thought.”

The bill, which was supported by insurance companies, removes several long-standing components of state law.

It would end by 2014 the prohibition of buying insurance across state lines. It would allow insurance companies to deny coverage to people with pre-existing conditions, and it would allow insurance companies to charge rates based on people’s age and geographic location.

It also would allow companies with fewer than 50 employees to band together and create a larger insurance pool, which could lower rates by spreading out risk.

Although insurance companies could charge more for people with pre-existing conditions and chronic illnesses, those people would be placed in a so-called high-risk pool. To keep out-of-pocket premium costs the same as everyone else’s, the state would pick up the additional costs by taxing the premiums paid by everyone else, with a maximum tax of $4 per month per person.

Republicans say current Maine law has made health insurance in the individual market so expensive that young and healthy people forgo health insurance altogether. As a result, health insurance premiums have become unaffordable for many.

The proposal uses Idaho as a model. That program started in 2000 as part of an effort to increase competition.

According the Idaho Department of Insurance, high-risk policyholders have a choice of five plans with a premium that is slightly more expensive than the standard rate. Health insurance companies assume a portion of the risk, and the state assumes the rest of the risk. The state pays for its cost with a tax on premiums.

In Idaho, a healthy 20-year-old man pays $104 a month for health insurance, while a 20-year-old in Maine pays $718 a month for a similar plan, according to a fact-sheet provided by Maine Republicans. In Idaho, a 60-year-old man pays $401 a month; a 60-year-old Mainer pays $1,076.

Blue Cross of Idaho is one of six companies that offer health insurance for the individual market in that state. In Maine, three companies offer insurance on the individual market.

Democrats and their supporters say it doesn’t make sense to revamp the system now that a new federal health care law is being implemented and will be fully in place in 2014.

They worry that the Republican plan will increase health care costs for people over age 50 and those who live in rural areas. They also say the bill would allow insurance companies to require people in rural areas to travel to Maine’s cities for medical procedures.

“They are trying to change things in ways that are not proven and in ways we feel are going to hurt people,” said Mitchell Stein, policy director for Consumers for Affordable Health Care.

Health care has been one of the core issues dividing the two political parties. Sen. Joseph Brannigan, D-Portland, the lead Senate Democrat on the committee, said it appears that Republicans have decided they don’t need to work with Democrats on the issue because they have the votes to pass the bill on their own.

In the Senate, Republicans hold a substantial majority, 20-14. But the GOP advantage in the House is much narrower, 78-72-1.

“This one is so core to their philosophy, there will be pressure to hang together even in the House,” Brannigan said.

MaineToday Media State House Writer Tom Bell can be contacted at 699-6261 or at: [email protected]