Health insurance companies doing business in Maine caution that national health reform legislation under debate in Congress is likely to backfire on small businesses, driving up insurance premiums and forcing more Maine employers and their workers out of coverage.
A consumer spokesman disagrees, however, saying that many regulations now being considered at the national level were adopted by the state years ago and provide important consumer protections as well as a framework for cost containment.
U.S. Sen. Olympia J. Snowe, a key player in the national debate, said Friday that she is concerned about the impact of health care reform legislation on Maine’s small businesses. Among other issues, she said, a proposed mandate for all businesses with more than 50 employees either to offer insurance or pay a significant penalty could have the effect of hampering financial growth and hindering recovery from the national economic recession.
While the legislation is still a moving target — with lightning-rod provisions such as new taxes, individual and employer mandates, and the so-called public option in constant metamorphosis — insurance company spokesmen said Friday that the pending cure for the nation’s health care blues could prove worse than the problem.
Anthem Blue Cross and Blue Shield of Maine is the state’s largest insurer. A subsidiary of the Wellpoint insurance corporation, Anthem policies cover a total of about 400,000 Mainers, including about 19,000 people with individual, nongroup policies. The company provides coverage to 5,402 small businesses with 50 or fewer employees.
Dan Corcoran, president of Anthem’s operations in Maine, said Friday that some insurance regulations proposed in the national legislation would have little impact in Maine, because Maine already provides for protections such as community-rated premiums, guaranteed issue of and renewal of coverage after illness, and other consumer benefits.
But proposed taxes on revenue generated by monthly premiums and on a company’s share of the health insurance market almost certainly would be passed on to consumers and could drive premium rates up an estimated 4 percent, he said.
Insurers also are concerned about the likelihood that the legislation will discourage or even prohibit companies from selling high-deductible policies that provide coverage only in the event of catastrophic illness.
Such policies, with annual deductibles of $5,000, $10,000, $15,000 and more, are popular with younger, healthy people, said Corcoran. Requiring companies to sell only policies with more comprehensive coverage, and the proposed mandate that individuals either purchase them or pay a penalty, would backfire since many indi-viduals would be likely to choose the relatively modest penalty rather than pay extra for more coverage than they need, he said.
Ed Kane, vice president of Harvard Pilgrim in Maine, said his company’s not-for-profit status ensures the pass-through of any new taxes to consumers. With a “small and exacting” companywide operating margin this year of 0.5 percent, or about $10 million, he said, “we have no option but to pass [new taxes] through to our customers.” Kane also expressed concern about Medicare cuts contained in the legislation, predicting that they would worsen hospital debts and force cost-shifting to private insurance payers.
Dan Fishbein of Aetna, which covers about 127,000 Mainers, said the hot-potato issue of a government-run health insurance option continues to concern private companies such as his.
While public option supporters claim such a program will provide much-needed competition for the private industry, Fishbein said that’s a red herring.
“There’s plenty of competition in Maine now,” he said.
Fishbein also expressed frustration over the legislation’s failure to address the issue of the high cost of health care services themselves.
“The issue is not that we need more competition; this is an intensely competitive market,” he said. “The problem is doing something to influence the underlying cost of care. That’s the only thing that will drive down the cost of coverage.”
In a prepared statement, a spokesman from Cigna said that company, too, opposes the public option. “The American public will ultimately be the ones negatively impacted by a government-sponsored plan because it is fiscally irresponsible, will turn back the clock on quality, threaten patients’ access and choice and worsen the existing cost shift between individuals in a government plan and those on employer-sponsored plans,” spokesman Christopher Curran said.
Maine’s insurance commissioner, Mila Kofman, charged with assessing the financial health of insurance companies as well as protecting consumer interests, declined to be interviewed about the pending health reform legislation, saying it would be “speculative,” according to a department spokeswoman.
But Joe Ditre, executive director of the Maine-based nonprofit group Consumers for Affordable Health Care, said Friday that insurance companies are using “scare tactics” to erode public support for essential change.
“They make it sound like small groups would see these phenomenal [premium] increases, but I have seen nothing to indicate that’s so,” he said.
Ditre said Maine has the “good fortune” to have adopted significant consumer protections and to have held insurers to high standards for public reporting of their activities and financial performance.
“Do we really need to legislate everything to make them act better?” he asked.
Sen. Snowe, in a telephone interview Friday afternoon, said she remains committed to building bipartisan support for health care reform. But the complexity of the bill and the increasingly partisan debate over its many interfacing elements, she said, call for a careful and unhurried process.
“It is critical that we do all we can to get the very best legislation possible,” she said. “Otherwise it could hamper the ability of businesses to create new jobs as we emerge from this recession. … If we don’t get this right for small businesses, we’ve lost a key part of the battle.”
