Few issues have been more detrimental to Maine’s economy than the relentless increase in the cost of health insurance. Our rates are among the most exorbitant in the nation, pricing many people out of the market and leaving some 133,000 Mainers with no coverage at all.
Various “reforms” over the last 18 years have made things worse by driving out competition. Many folks take deductibles as high as $10,000 or even $15,000 to get policies they can afford.
Consider just one example of this sorry situation. A 40-year-old Mainer buying an individual policy with a $1,500 deductible faces a premium of $897 per month — more than $10,700 a year. The same policy costs $302 per month in New Hampshire and $222 in Idaho, two states with demographics similar to Maine’s. Such staggering disparities are a big drag on business development and job creation.
For years, Mainers have been held captive to this dysfunctional system. Over the past decade, the Legislature consistently refused to consider common-sense, market-based solutions, although many were proposed. That era of inaction is now over. A bill moving through the Legislature — LD 1333 — will transform our system by expanding competition, providing more insurance options and guaranteeing access to affordable, subsidized coverage for individuals with chronic and costly conditions.
This Republican plan has been crafted to jibe with the Affordable Care Act in the event the law survives court challenges. If ObamaCare is struck down, the plan provides a structure that lowers costs, expands choices and moves Maine into the American mainstream. In short, this plan creates certainty for Mainers regardless of the fate of ObamaCare.
No insurance reform can solve all of our problems overnight. Rising rates are a national phenomenon, but LD 1333 lays out concrete steps to get us moving in the right direction.
First, it allows individuals to purchase health insurance from companies licensed in other states. Specifically, it permits carriers authorized to sell insurance in Connecticut, Massachusetts, New Hampshire and Rhode Island to offer their individual policies for sale in Maine. We believe this part of the plan, which would begin in 2014, will generate stronger competition, lower pricing and a much broader assortment of policies to meet a variety of budgets. It would replace our “one size fits none” approach with more choices.
Companies with fewer than 50 employees would be allowed to band together to create larger insurance pools. By distributing risk over a larger number of employees, rates should come down. For companies with 20 or fewer employees, the plan also creates a tax credit for the expense of developing and maintaining wellness programs. The credit would range from $100 per employee to a maximum of $2,000.
Some critics claim that the plan shuts out the chronically ill and others with pre-existing conditions, but that’s not true. Maine’s guaranteed issue mandate remains in force. The plan sets up an Idaho-style reinsurance program for individuals with chronic illnesses, to be called the Maine Guaranteed Access Plan. It would be funded by a monthly assessment of $4 on all privately insured Mainers.
People in this group — no more than 2 percent of the population — would choose from about five private insurance plans. To make sure their out-of-pocket premium costs stay in line with everyone else, the state will pay the differential to insurance companies from the reinsurance fund. Idaho’s reinsurance pool has been operational since 2001 and has amassed an $18 million reserve fund.
Overall, increased competition and more affordability in coverage options will enable young and healthy people to buy insurance policies, thereby expanding the pool and keeping costs lower across the board.
Space limits prevent us from providing more details, but this is one bill where the content matches the title — An Act to Expand Health Care Choices and Provide Affordable Care.
Sen. Rodney Whittemore, R-Skowhegan, and Rep. Wes Richardson, R-Warren, are co-chairmen of the Insurance and Financial Services Committee.