It’s no secret that health insurance in Maine is costly. Maine people pay some of the highest rates in the country and have for quite a while.

There are a number of reasons for this. First, medical services in Maine are very expensive. Second, we have a large medical welfare population that pays little to nothing into the system. Finally, Maine’s restrictive health insurance laws have decreased competition among insurers and forced individuals away from private insurance.

In order to bring health insurance premiums in line, all three issues, as well as other related problems, are being confronted by the current Legislature.

The cost of care itself is addressed in several ways. Maine’s previous Certificate of Need (CON) law forced any health care provider to first apply to the state and then be approved for a CON before expanding an existing health care facility or opening a new one, no matter how small. It added unnecessary costs and red tape, protected health care monopolies and stifled innovation within the industry. The new law, passed last June, will allow facilities or expansions up to $3 million to be built without a CON, injecting some much needed competition into our existing health care network.

Another helpful change is one to “Rule 850.” This insurance rule blocked insurers from offering incentives to their clients to travel for treatments. Maine was the only state to have this prohibition and it has proved expensive to health care consumers. Removing it will stimulate competition among providers, potentially lowering the cost of care.

Maine has endured some of the most restrictive health insurance market regulations in the country. Our guaranteed issue and strict community rating laws enacted in the early 1990s forced insurers to no longer base premiums on risk. This meant that younger, healthier people had to pay nearly the same amount as older, less healthy folks. As a result, younger people dropped out of the market, creating an extreme adverse selection situation.

Public Law 90 (PL 90), Maine’s new health insurance statute, begins to change this while also putting us into compliance with the federal Affordable Care Act, often called “ObamaCare.”

Over the next few years, our insurance system will slowly change, allowing younger citizens to get the premium benefits of their low risk. PL 90 also creates a mechanism called the Guaranteed Access Plan that assures the least healthy among us are able to get affordable coverage.

One other big change to Maine’s insurance laws will begin in 2014 when Maine people will finally be allowed to shop for health insurance from other states. This will increase competition within our insurance market and stimulate innovation and efficiency.

Early assessments of these changes are very promising. Some of the key findings in an independent actuarial study recently released by Maine’s Bureau of Insurance findings are:

• The individual market reinsurance program created by PL 90 may reduce individual market premiums by 12 percent to 15 percent.

• In PL 90’s first year of operation, approximately 80 percent of the individual market will experience lower premiums than they would have in the absence of PL 90.

• Maine’s individual market may grow 6 percent to 10 percent prior to 2014 due to lower premiums.

These findings are encouraging, especially considering the double-digit premium increases Maine has suffered through year after year. It will not be a smooth transition into a more open and competitive marketplace. As we have every year, some individuals and small groups may see increases during the transition. Ultimately, however, all will see more stable and affordable premiums.

One of the largest problems that Maine struggles with is our gigantic Medicaid program (MaineCare). It is extremely expensive for both the taxpayers and for anyone purchasing health insurance, since many MaineCare recipients pay nothing toward their care.

MaineCare also reimburses health care providers at a much lower rate than insurance companies and private citizens do. The difference must be shifted to the rest of us, driving up private insurance premiums significantly.

More than a quarter of Maine’s population is now on MaineCare, far more than was ever intended. Year after year the Legislature struggles with this “elephant in the room.” If we don’t get this behemoth under control with long-term systematic changes, none of the health care or health insurance reforms will matter.

All of these problems — the high cost of care, our over-regulated insurance markets and our out-of-control medical welfare program — have been growing and festering for decades. The complexities and nuances of our system in Maine mean that there is no single answer or easy fix.

Only by attacking each issue with rational thought will Maine people be able to afford the health care they desire.

State Rep. Deborah Sanderson, R-Chelsea, serves on the Health and Human Services Committee and the Criminal Justice and Public Safety Committee.

 

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