May 6, 2011

Stakes high as House backs insurance bill

Republicans say the overhaul would lower prices for all; Democrats say it will be 'disastrous' and divide the state.

By Tom Bell
Staff Writer

(Continued from page 1)

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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:


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