January 20, 2013

Health insurance reform faces scrutiny

Critics say the 2011 law hurt small, rural firms; backers counter that it has increased options and cut costs.

By Kelley Bouchard kbouchard@pressherald.com
Staff Writer

Gary Peachey, owner of Peachey Builders in Augusta, saw his small company's health insurance costs decrease by nearly 5 percent in 2012.

Meanwhile, Ken Simons, who operates a physical therapy practice with offices in Scarborough and Sanford, saw his health insurance costs increase by about 30 percent.

Peachey and Simons represent the diverse experiences of small Maine businesses in the wake of controversial health insurance reform legislation passed in May 2011 by the Republican-led Legislature. Public Law Chapter 90 took effect five months later, dramatically shifting the cost of employee benefits for thousands of companies across Maine.

A little over a year later, with Democrats back in charge, the Legislature's Insurance and Financial Services Committee is poised to review the law's benefits and drawbacks. Titles of several bills targeting different parts of the law were expected to be filed late Friday with the statute revisor.

Rep. Sharon Treat, D-Hallowell, committee chairwoman, said she doesn't anticipate an effort to repeal the entire law. However, certain aspects will be closely examined and may be overturned, she said, including a less-rigorous review of rate increases for small-group and individual plans.

"We need to find out how it has worked or not worked," Treat said. "Anything we do hopefully will be done with bipartisan support. I personally am not coming in with the intention to repeal the whole law."

The law included three major health insurance reforms:

Allowed insurance providers greater freedom to vary rates based on a company's location and other factors, such as the ages, occupations and smoking status of employees.

Eliminated a requirement for prior state approval of rate increases of less than 10 percent on individual policies and small-group plans, defined as those that have 50 or fewer members.

Added a $4 monthly tax on each person covered by all private health insurance policies, creating a so-called reinsurance fund that helps insurance companies cover high-cost individual plans.

Sen. Rodney Whittemore, R-Skowhegan, also sits on the insurance committee. He agrees that the law deserves a balanced bipartisan review, but he is openly in favor of the law, praising it as a move toward market deregulation and greater competition.

"PL 90 is a very good law and for the most part it has worked very well," Whittemore said. "It has opened the door for more insurance companies to come into the state, which will increase options and decrease costs."

Whittemore and other supporters say the law is working because it has lowered premiums for some Maine companies, especially those in southern Maine with younger, healthier employees.


Critics counter that insurance rates may have decreased for some, but they have increased substantially for small businesses in rural areas with older employees, especially in northern Maine.

Consumers for Affordable Health Care, an Augusta-based advocacy group, released a report late last summer highlighting those patterns.

All individual policy holders younger than 40 saw rate reductions, while most Mainers age 55 and older saw their premiums increase, according to the report, "Few Winners, Many Losers: Evaluating the Impact of Key Provisions of Maine's New Health Insurance Law to Date."

The report also concluded that 90 percent of small businesses experienced increases, while 10 percent experienced decreases.

"Proponents said this would immediately reduce rates for everyone, and in fact they went up for 90 percent," said Joseph Ditre, executive director of Consumers for Affordable Health Care.

Ditre and other critics question the law's removal of the state's ability to deny or hold public hearings on rate hikes of less than 10 percent.

They also worry about a lack of public oversight for the Maine Guaranteed Access Reinsurance Association, a corporation created by PL 90 to administer the reinsurance fund.

(Continued on page 2)

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