PORTLAND — John Richardson’s recent Press Herald story (“Employers win, lose as health law shifts premiums,” Dec. 12) accurately described the new criteria allowed by law for determining the price of health insurance in Maine.

In late September, insurance companies began taking into account where people live as well as their age when calculating their true cost of insurance. Younger and middle-aged workers in southern Maine now are getting lower prices than older workers in rural Maine. But there’s more to the story.

Additional Photos

Employees at Winxnet in Portland. The IT company, which employs mostly younger workers, saw its insurance rates drop for 2012. 2011 File Photo/Gordon Chibroski

Under the old law, the average 60-year-old who spent about four times more than a 20-year-old for health care services paid only 1.5 times more for their insurance. In order to adequately fund the costs for older patients, insurance companies had to charge higher rates for everyone. That put health insurance out of the reach for many young and middle-age workers. Without the participation of those younger, healthier people, insurance premium costs remained high for families and employers alike. All that is beginning to change.

There is good reason for reforming the state law: Maine is an outlier among all the states when it comes to health care costs. We have the oldest average age in the country, but we also have had a system that protected hospitals from competition.

From 1991 through 2004, Maine led the entire nation in the annual per capita increase for health care spending, according to the Kaiser Family Foundation. It is not sustainable, and it is an impediment to job creation. Prior to passage of Maine’s health reform, a poll by the Maine Chamber of Commerce identified health insurance costs as the No. 1 concern of the state’s employers.

Fortunately, additional changes are on the way to help small, rural employers with older workers who are experiencing sticker shock. First, some may choose to switch from their small group plans and buy individual coverage beginning in July. At that time, insurers will have their own reinsurance association to spread the cost for chronically and critically ill people. This reinsurance pool will be funded by a $4 surcharge on all health care policies and should result in lower premiums for everyone under this arrangement. That should provide relief to both employees and employers.

Other states’ experience has shown that Maine’s new approach works. A look at the individual rates for New Hampshire, North Dakota, Virginia, Utah and Maine shows a wide disparity in pricing.

For example, the monthly cost for a 20-year-old for individual coverage with a $2,500 deductible and no coinsurance in Virginia is $97 per month; in Utah it is $121.60; in North Dakota it is $184.30 and New Hampshire it is $220.51. In Maine, the 20-year-old must pay $527.24 per month.

At the other of the spectrum, a 60-year-old with the same deductible and no coinsurance pays $414.59 in Virginia; $518.63 in Utah; $495.30 in North Dakota; $732.99 in New Hampshire; and $791.86 in Maine.

Utah, Virginia and North Dakota recently were ranked by Forbes as the three top “Best States for Business” in the country. New Hampshire was ranked 27th, and Maine was ranked 50th.

The snapshot offered in the article measured only pricing changes for the month of October. More data are required before we draw too many conclusions.

The most important thing we can do is to allow the law to be fully implemented before any fundamental changes are made.

Maine workers’ compensation system reforms of the 1990s lowered insurance costs by nearly half over a 10-year period. This law deserves the same patience and support if we are to reverse the certainty of higher and unaffordable health insurance costs.

Kenneth A. Ross is president of Clark Insurance in Portland.

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