For 30 years, Maine has been at the forefront in addressing problems in the health insurance market that make health insurance unavailable or unaffordable.

Maine governors and state legislators of both parties as well as independents collaborated to devise innovative laws, with varying degrees of success, to help stabilize the health insurance market in Maine and make it fair for consumers and health insurers alike. Nonetheless, this has been difficult due to the relatively small size of the market and the uncertainty about who would purchase policies each year.

As former chief insurance regulators in Maine, we believe that the best form of consumer protection is to ensure that consumers can make informed decisions when purchasing coverage from financially sound companies in a healthy competitive marketplace. The health insurance market, like other markets, seeks a measure of predictability for the firms offering products in those markets. We are concerned that some of the contemplated actions in Washington, D.C., could have terrible consequences for thousands of Maine citizens.

Maine has been a leader in empowering consumers and seeking to create a stable market for insurers. Since 1992, Maine citizens have had protections for pre-existing conditions. However, many Mainers have struggled to buy and keep their health insurance because of cost. The market reforms that Maine and other New England states had already adopted served as the model for the ACA, such as protecting people with pre-existing conditions. The ACA has helped nearly 85,000 Mainers afford health insurance by reducing their monthly premiums (also called advanced premium tax credit) and has helped reduce out-of-pocket expenses like co-insurance and copays through cost-sharing reductions.

The ACA also tried to strengthen the individual health insurance market, which is inherently fragile. Historically, the business risk in the individual health insurance market was driven by the likelihood that only sick people would enroll, along with the regulatory requirements imposed on the market participants. The ACA includes a number of important elements designed to stabilize and shore up the private individual health insurance market.

To ensure that both healthy people and those with medical needs enrolled, the ACA requires everyone to be covered and includes a tax penalty for people who choose not to do so. This mandate is important because insurance pools operate under the law of large numbers and must have healthy people in addition to sick enrollees. The ACA’s requirement for individuals to be insured also helps keep the individual health insurance market predictable for insurers and the risk pool stable. The basic principles of insurance only work if people purchase insurance as a part of a large pool on an ongoing basis – without knowing whether one will need to file a claim this year, next year or ever.

The problem is that the “repeal” approaches under consideration in Washington create uncertainty with negative implications for private health insurance markets, especially the individual market. Knowing the rules enables insurers to assess whether they can be viable in a state or a market. In some states there is already only one statewide insurer; a further loss of insurers means that there would be no private health insurance options. Absent private insurance options, individuals would be responsible for the full cost of their medical care or compelled to rely on public programs. Neither option offers financial security for the individual or the government.

Also, insurers in the individual market and in the exchange marketplaces used several key assumptions based on existing law when they set their premiums for 2017. These assumptions included the individual responsibility requirement and the risk stabilization mechanisms. If Congress were to repeal the law without first replacing it with new provisions that keep people covered and based on sound actuarial analyses, such action would render the assumptions built into 2017 rates for the individual market incorrect and likely contribute to insurer withdrawal.

For insurers staying in a market, an uncertain regulatory environment could impose financial pressure on insurer solvency. These concerns would further destabilize individual markets, possibly resulting in large premium increases, the need for state financial support, and even regulators stepping in to prohibit insurers from enrolling new customers in order to prevent an insolvency.

As we know in Maine from careful study and bipartisan efforts over many years, any changes to the individual health insurance market must be pursued with extreme caution. As former insurance regulators, we are very concerned that abrupt or ill-considered changes to the current system without the careful and considered input of objective actuarial and market analyses could cause the individual health insurance markets to collapse in many states, and in Maine, thousands of Mainers to lose their health coverage.

 


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