Senate rejects bill requiring pre-approval for small group insurance rate increases

AUGUSTA, Maine — Senate Republicans have quashed an effort to require state approval before health insurance rate hikes take effect in the small group market, which is made of small employers.

By a 19-16 vote, the Senate rejected a measure that would have required small group health insurance rate increase requests to face the same review by the Bureau of Insurance as raises in the individual market.

Under a measure passed by the Legislature last year, any increases less than 10 percent in the small group market will go into effect when proposed, although the superintendent of insurance can review them later.

“We’re going to allow insurance companies to go ahead and increase rates without proving they are justified,” said Sen. Phil Bartlett, D-Gorham. “We have evidence, year after year — just Google ‘Anthem Maine rate increases’ — year after year. Anthem goes all the way in court to try and justify rate increases that are deemed to be excessive.”

He said Maine small businesses are being hit hard by increases in health insurance rates, with some of the hikes in the double digits. He said insurance companies should have to justify any rate increases, not just those in excess of 10 percent.

But Sen. Michael Thibodeau, R-Winterport, argued the legislation on the books provides adequate oversight of insurance rates for all proposed rate increases and said the old process caused excessive costs.

“All this does is allow the insurance company to file their new rates and use them so they don’t have to plan ahead literally for years because sometimes these rate cases take years to go through the process,” he said.

That provoked a sharp response from Sen. Troy Jackson, D-Allagash, who said he was astonished that lawmakers would support having Mainers pay increased rates without an approval process to make sure the rates are warranted.

“People who are having a hard time paying oil bills and things like that are the ones that have to say, ‘yeah charge me more and maybe I will get it back later,’” he said. “That does not make any sense to me.”

Sen. Rodney Whittemore, R-Skowhegan, co-chairman of the Legislature’s Insurance and Financial Services Committee, told the Senate that current law allows the insurance superintendent to intervene on any rate proposal that he believes may be excessive and needs to be reviewed.

“LD 1170 would take us back to an expensive and unnecessary process of rate review and the extra cost will be passed on to the premiums we all pay for insurance,” he said.

Supporters of the legislation pointed to last month’s Maine supreme court ruling that upheld the decisions of then Bureau of Insurance Superintendent Mila Kofman’s decision to slash by nearly half a rate increase affecting about 11,000 Mainers covered by Anthem’s individual health insurance policies.

Anthem originally sought a 9.7 percent increase before amending its request down to 9.2 percent and Kofman found that only a 5.2 percent increase was warranted and the court unanimously agreed. It was the third case in a row where Anthem has appealed a rate increase request and lost in the courts on appeal.

Sen. Joe Brannigan, D-Portland, a member of the Insurance and Financial Services Committee committee, said allowing a requested increase to go into effect means Mainers likely will be paying more than they should for health insurance, given the recent court rulings.

“Will somebody file an appeal and ask for a review?” he asked. “We don’t know. Meanwhile people will pay those higher rates.”

The measure was defeated in the House earlier this week so the bill is dead for this session.

Democrats vowed they would seek to repeal the law in the new Legislature that will be elected in November.