Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

September 14, 2012

Did Maine's insurance fix work?

Under Maine's new health insurance law, some business premiums have fallen while others jumped, stirring disagreement on its value.

By Eric Russell erussell@pressherald.com
Staff Writer

Lisa Burton, who owns Reel Pizza Cinerama in Bar Harbor with her husband, saw her health insurance rate jump 67 percent this year. That's on top of a 35 percent increase last year. In two years, premiums to cover her three full-time employees have doubled.

"I feel lucky that business is doing well enough that I can absorb it," she said. "Other small businesses aren't that lucky."

Gilbert Buthlay, chief executive officer of BEK Inc., a computer network design and service company in Brunswick, saw his insurance premiums rise this year, too, but by only 3 percent for his 13 workers.

"Because of the makeup of our work force, we were able to take advantage of another option that costs less but is a better fit," Buthlay said. "Our increases had been 10 or 15 percent, so we'll take 3 percent. And my employees are happy."

The experiences of those two small businesses show how the state's health insurance reform law has created both winners and losers since it was passed last year.

Supporters say the law is doing what was intended by lowering premiums for some Mainers and small businesses -- mostly companies in southern Maine with younger, healthier employees -- through deregulation and increased market competition.

Critics counter that while insurance rates have decreased for some, they have jumped substantially for older Mainers and small businesses in rural Maine.

Both sides are using the same data to make their case. The issue recently has become a pre-election wedge issue for Republicans, who backed the reform package and want to retain their majority in the Legislature, and Democrats, who opposed the law and want to take back control of the House and Senate.

Maine Insurance Superintendent Eric Cioppa said the most accurate characterization of the law's impact to date is "incomplete."

"It's a step in the right direction, but the real issue is the cost of health care," he said. "Until those costs are reined in, insurance rates as a whole are not going to come down."

Public Law 90, which passed in May 2011 and took effect in October, did three things:

• Gave providers more authority to vary premiums for different age groups.

• Eliminated the need for state approval of rate increases of less than 10 percent.

• Created a "reinsurance" fund to help consumers pay costly medical bills. That program is funded by a $4 tax on nearly all policies sold in Maine.

In the months that have passed, some patterns have emerged. Consumers for Affordable Health Care, an Augusta-based advocacy group, released a report this month highlighting those patterns and criticizing the law's impact to date.

All individual policy holders younger than 40 have seen a rate cut, while most Mainers older than 55 saw premiums increase. The report also says 90 percent of businesses have seen increases since the law passed, while 10 percent have seen decreases.

Democrats seized on those numbers to back their argument that the law has been a disaster.

"A lot of concerns that were just dismissed when the bill was discussed have proven true," said Rep. Sharon Treat, D-Hallowell, lead Democrat on the Legislature's Insurance and Financial Services Committee.

Rep. Jonathan McKane, R-Newcastle, another member of the insurance committee, said Democrats and consumer advocates are cherry-picking numbers.

"They are taking bad cases and waving them high on a petard," he said. "We never said it was going to turn around the market overnight."

McKane noted that insurance premiums had been increasing steadily for years before the passage of the law. They are still increasing on average, just not as steeply.

(Continued on page 2)

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