AUGUSTA – In a straight party-line vote, the Maine House gave preliminary approval Thursday to a bill that would overhaul Maine’s health insurance system, despite Democrats’ objections that Republican leaders are pushing through a reform package that would hurt older people, especially those who live in rural areas.

The 76-72 vote was the first round of a partisan battle that will ramp up in the next few days as supporters and opponents pressure lawmakers on the issue. The Senate will take its first vote on the bill Tuesday, with the House taking its final vote the same day.

LD 1333 would strip away state regulations that have been put in place over the past two decades and open the individual and small-group insurance market to more competition. It also would give insurance companies more leeway in how much they can charge policyholders based on age, occupation and place of residence, and whether they smoke.

The bill also would repeal a state law that prohibits insurance companies from requiring policyholders to travel to hospitals in other parts of the state for medical procedures.

By encouraging competition among hospitals and lowering medical costs, the repeal would lead to lower premiums for everyone, Republicans say.

The legislation would affect only people who buy insurance independently or through employers whose companies have 50 or fewer workers.

There is a provision to allow companies of any size to band together to essentially create their own insurance company.

The bill would allow companies from every other New England state except Vermont to sell insurance in Maine. Current law prohibits out-of-state companies from selling insurance here.

Democrats said the bill would raise premiums for older people who live in rural areas and jeopardize the viability of rural hospitals. They also complained that lawmakers and the public have had little time to understand the complex 45-page bill, which was reworked Wednesday and was not posted online until late Wednesday night.

Democrats noted that the Legislature spent more time in this session debating a bill that made whoopee pies Maine’s official state treat than discussing the biggest change to the state’s health insurance system since the early 1990s.

Adding to the drama Thursday, more than 70 demonstrators lined the hallway outside the House chamber and chanted “Read the bill!” and “Please vote no!” as lawmakers walked past them to reach their seats.

During the floor debate, Republicans for the most part sat silent as numerous Democrats lashed out at the bill. Sen. John Martin, D-Eagle Lake, warned Republicans from rural districts that they will pay a heavy political price for supporting a bill that would be “disastrous” for rural Maine.

If the bill passes, he said, insurance companies will force people who live in Aroostook County to drive to Bangor for medical procedures.

“Vote for it,” he told the Republican lawmakers, sarcastically. “I will be happy to go to your communities. I will go to Houlton. I will go to Machias. I will go to Norway. I will go to Caribou. I will go to Presque Isle, and I will hold regional meetings to discuss your vote.”

Rep. Stephen Lovejoy, D-Portland, said the bill would lower insurance premiums for people in Cumberland, York and Androscoggin counties because the population in those counties is, on average, younger than in northern counties. In addition, he said, his constituents live close to the state’s largest hospitals and wouldn’t have to go far to get medical care.

Nevertheless, he said, he will vote against the bill because it would hurt the state as a whole.

“It will divide this state even more and hamper economic development in northern Maine,” he said.

Rep. Jonathan McKane, R-Newcastle, led the Republican defense. He noted that L.D. 1333 would prohibit insurers from rejecting people for pre-existing conditions and allow those people to get the same insurance plans as everyone else.

The bill would do that by creating a high-risk pool to be run by a nonprofit group, the Maine Guaranteed Access Reinsurance Association. The group would essentially subsidize the insurance costs of people who have pre-existing conditions with revenue raised from a $4 fee monthly fee on every policyholder in the state — all 500,000 of them.

McKane called the bill a “kinder, gentler compromise” and said it would lower the cost of insurance for everyone, as it has done in other states that have adopted the model, such as Idaho.

“There are 50-year-olds in Idaho paying the same amount as 20-year-olds in Maine,” he said. “If that doesn’t say we should do something, I don’t know what will.”

The bill, he said, “puts Maine on the road to normalcy.”

After the vote, Rep. Paul Davis, a Republican from the tiny town of Sangerville in Piscataquis County, said he isn’t worried about alienating voters or upsetting hospitals in rural areas.

He said the current regulatory system has forced insurers to raise premiums so high that insurance has become unaffordable for most people.

“If people can’t get insurance to go to hospitals, what’s the point of having the hospitals?” he asked.

The bill would change rules that limit how much insurers can vary policyholders’ premiums based on age, occupation and place of residence.

State law now limits the range between the highest-risk policyholder and the lowest-risk policyholder to a ratio of 1.5 to 1. The GOP bill would expand the ratio to 3 to 1 next year and 5 to 1 by 2015.

According to a memo submitted Wednesday by the state Bureau of Insurance, expanding the ratio to 3 to 1 would lower premiums for 58 percent of the market and raise premiums for the rest.

The memo said policyholders in northern Maine would, on average, experience a 19 percent increase, while those Down East would see a 22 percent increase and policyholders in the southern region would get a 10 percent decrease.

The high-risk pool mechanism in the bill would reduce premiums, on average, by 30 percent for the majority of policyholders, the report said.

However, for those who stay in their current plans because their age and health would make switching too costly, premiums would “skyrocket” over time, to as much as 170 percent of current rates, according to the report.

The report said many of those people would at some point find it cheaper to get insurance through the high-risk pool.

 

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

tbell@mainetoday.com