AUGUSTA, Maine — A Republican-backed state law aimed at lowering health insurance premiums in Maine is being panned in a new report by affordable health care advocates.

But supporters of the law, especially those who wrote and co-sponsored it in the Maine Legislature, say the law is working but needs to be fully implemented before anyone draws conclusions about its effectiveness.

Supporters say key provisions of the law, including one that allows people to buy health insurance across state lines, have not yet gone into effect.

In its report issued earlier this month, Consumers for Affordable Health Care examined health insurance rate renewal information at the Bureau of Insurance. The report focused on renewal rates for insurance customers in the individual and small-group markets.

What they found did not bode well for the new law’s effectiveness, said Joe Ditre, executive director of the consumer group.

Key findings showed 54 percent of individual policyholders in Maine saw premium increases, while 90 percent of small business policyholders saw rates go up. Small-group plans cover up to 50 employees.

The report also draws attention to a new $4 assessment tacked on to all health insurance policies in Maine as a result of the law.

That assessment is used to build an annual fund of nearly $21 million that a new nonprofit organization , the Maine Guaranteed Access Reinsurance Association, also created by the law, uses to reinsure the most costly or high-risk clients on the books of Maine insurance companies.

“No one knows they are paying this tax,” Ditre said. “They are being taxed, and this is all under the radar.”

But advocates for the law say the new reinsurance pools are the reason Anthem, one of the state’s largest health insurance providers, asked for an average rate increase of only 1.7 percent this year.

According to a statement on the Bureau of Insurance’s website, that represents $11 million in savings for Anthem because of the anticipated ability to use the MGARA funds to pay down high-risk claims.

Without the new nonprofit and the reinsurance pool, the company would have asked for a 21 percent increase, according to officials and documents filed with the bureau.

A 21 percent hike for Anthem would not necessarily have been approved by the bureau, according to Doug Dunbar, a spokesman for the Department of Professional and Financial Regulation, which includes the Bureau of Insurance.

“It’s not possible to indicate whether a different rate increase request from Anthem would have been approved,” Dunbar wrote in an email.

The Maine Guaranteed Access Reinsurance Association board, as defined by the law, is largely controlled by insurance companies doing business in Maine, Ditre said.

Of the 11 members of the board, five are insurance company representatives, another is an insurance broker, another is a small-business person — whose small business is in insurance. The other board members include a car sales businessman, two representatives from the medical community and a former credit union president.

Advocates for the law say it creates a better “free market” approach to health insurance, but opponents say it’s little more than corporate welfare and an annual $21 million subsidy or bailout for some of the most profitable companies doing business in Maine.

The law is written in a way that requires insurance companies to pay the fees collected, but it also allows them not to disclose or itemize the fee.

The law also allows the new nonprofit to increase the fee, as needed, by an additional $2 per month, up to $6 per month per person insured.

Ditre believes MGARA will almost certainly increase the assessment. He said actuarial studies estimate the true cost of insuring the highest-risk clients in Maine is closer to $65 million, which is three times what MGARA is currently collecting for that purpose.

“Essentially, what we have here in MGARA is a group that gets $21 million in public money with no public oversight,” Ditre said. “This Legislature delegated its authority to increase the tax by half — by an additional $2 per member per month.”

The law changed the way insurance companies are allowed to set rates and allows them to charge more based on location, age and risk assessment. Older people in more rural places are the most vulnerable to the rate increases, and businesses with small-group policies are being hard-hit, Ditre said.

Only the small-group policies that include larger numbers of young workers, mostly in southern Maine, have experienced small rate decreases.

Some rates go down

Supporters of the law say rate increases overall are less than what they’ve been each year prior to the law and that prior to the law there were no notable rate decreases.

So the law is moving in the right direction and indeed working, according to one of the co-authors of the bill, state Rep. Les Fossel, R-Alna.

“One claim — that 54 percent of individual policyholders saw higher premiums — neglects to add that nearly 100 percent of individual policyholders saw increases in previous years,” Fossel wrote in a guest column in the Portland Press Herald on Sept. 11. “Nor does the report mention that nearly 87 percent of individual policyholders now have access to lower cost alternatives that meet their needs.”

Dunbar, the department spokesman, backs up some of Fossel’s statement, noting, “Premiums have been increasing significantly for years.”

Dunbar said the rate data for the fourth quarter of 2011 and the first quarter of 2012 show that 10.6 percent of those in small-group plans across the state saw their rates go down.

“For the same period last year (before the new law), only 3.26 percent of small groups experienced a decrease in rates,” Dunbar wrote. ” While rates can vary significantly among groups for many reasons (e.g., changes in group size or medical trend inflation), the overall change since the enactment of PL 90 is a 6.9 percent increase in the number of small groups experiencing rate relief.”

An analysis by the state’s Bureau of Insurance also touts the reduction in the rate of increase for premiums, but it highlights how rates were still going up for most policyholders post PL 90.

Fossel and others have argued that the changes have created a new host of insurance products that allow people to buy the most affordable plan to cover their needs, but Ditre said what’s really happening is people are being left short of the coverage they need.

“People are in the position where they are going to drop their coverage or choose much, much higher deductibles — all which create a windfall for the insurance industry,” Ditre said. “They get rid of their higher risks by rating people out of coverage or people change to coverage that is inadequate, and they’ve got to pay a premium for that for which they see very little benefit. Again, it’s a tremendous windfall for the insurance industry.”

More time needed?

The situation for small business is not getting any better, Ditre said. “It’s ironic to me that they are saying give it time, when in fact those legislators who said we need more time to study this law were told specifically by the bill’s sponsors: ‘These issues have been studied to death. We don’t need to take any more time. We know what needs to be done and free-market competition will lower these rates.’”

Eric Cioppa, superintendent of the Maine Insurance Bureau, agrees with those who say it will take more time to fully understand the impacts of the new law on insurance rates.

He said it’s too soon to tell whether the law is achieving some of its other goals, including drawing more people into the health insurance market in Maine, which could ultimately bring rates down.

Cioppa said Consumers for Affordable Health Care’s report failed to mention that insurance providers will pay premiums to MGARA for any clients they want covered in the reinsurance pool. Those premiums are paid at 90 cents on the dollar, he said.

He said part of that formulation is that MGARA isn’t in the business to make money but to maximize the $4 assessment to cover claims. Ultimately, that relief is aimed at reducing rates in the individual insurance market, he said.

He said the thing that is driving insurance rates skyward in Maine and elsewhere is medical costs.

“I’m not casting aspersions on anyone, but the medical costs and the medical trends — I think everyone acknowledges there’s still work to do on that,” Cioppa said.

Scott Thistle

Scott Thistle is the State Politics Editor for the Lewiston Sun Journal. He has covered federal, state and local politics in Maine for nearly two decades.

81 replies on “Report claims state health insurance reform not working”

  1. LePage’s reform is a huge giveaway to the insurance companies, in large part by removing the caps on premiums for the elderly and the rural:

    http://www.iwatchnews.org/2011/10/06/6883/analysis-health-insurers-win-big-maine

    The young, who often don’t bother with insurance at all, have lower premiums, but again, it is at the expense of people who are most likely to need a doctor for major illness:

    bangordailynews.com/2012/09/04/health/report-young-mainers-pay-less-for-health-coverage-elderly-pay-more-under-insurance-law/

    The insurance companies, riding LePage’s back, are laughing at us, all the way to the bank. 

    1. PL90 doesn’t remove caps, but allows insurers to expand the price range of their policies (I’ll note that the Affordable Care Act aka Obamacare does the same thing).

      Before LD1333 became law, insurance companies in Maine were only able to charge 50% more for their highest for the same policy covering a higher risk customer. So if a 25 year old paid $300 a month for Plan A, a 55 year old could only be charged $450 a month, even though they likely would require more health care.

      PL90 allows companies to charge up to five time more, or this is limited to three times as much per Obamacare. Using our example, that $300 a month premium for the 25 year old could be priced at $900 a month.

      If Obamacare is repealed, then Maine law would allow the ratio to go to 5 to 1.

      1. “PL90 doesn’t remove caps, but allows insurers to expand the price range.” 

        You get an award for tricky double-speak for that one.

      2. Universal healthcare would stop or control this profit gouging.  Unfortunately the GOP doesn’t want to stop it.  So to blunt this reality they lie and say that 47% of Americans are slackers, welfare cheats, bums, and ner-do-wells who feel entitled to a free ride.

        1. If you don’t like profit gouging, don’t purchase their services. That is the way it used to be before the government began meddling. That is also when insurance was actually for “insurance” and it cost about the same as a telephone bill.

    2. “The insurance companies, riding LePage’s back, are laughing at us, all the way to the bank”
      Not ALL of us, just about 30% , The Rest of us they are scared to death of!

    3. Very strange yet illustrative of the way many of you
      basement dwellers (+ CD & PI “lawyers” + public sector union
      stiffs) work LePage’s name into so many stories. I didn’t even support LePage,
      but the sheer venom & intellectual dishonesty (or stupidity, so @ least you
      have that excuse… congrats) from so many of you speaks for itself.   You have no solutions for an unsustainable
      financial path, refuse to see the same, & blindly parrot talking points
      that makes y’all feel wonderful when you gather to discuss amongst yerselves
      while taking the rest of us over the financial cliff.

      1. here’s an idea… let’s pour more money down the military industrial complex rat hole. that’s where the money goes.

    4. And Obama’s plan is too.   Lets get rid of the all health care insurance except for major medical.  It would be a lot cheaper for everyone if we all pay for your average doctor visit.  The reason doctors are so expensive is because of insurance.

  2. JUST ANOTHER CORRUPT ATTEMPT TO FLEECE,  THE TAXPAYERS.  GIT RID OF CAREER POLITICIANS AS WELL AS THE OUTDATED , 2 PARTY SYSTEM. 

  3. Is there anyone out here who is still naive enough to believe an insurance company would do anything that didn’t lead to more money, not less? One hundred and fifty years ago, there was no such thing as insurance, now, they are running our lives. They are practically deciding who lives and who dies. 

      1. In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations. Prior to this they were a non profit company. Greed drives us in many directions. The need for more more more at the expense of others is a dark avenue to travel.

      2. Very true Gerry, and thus is the arguement, again, made for Public Option. Not to mention a VERY serious re-visiting of the insurance provision’s about their rate’s and Maine’s insane concept of allowing the insurance companies to raise their rates up 10 10% per year, without any oversight, and the only recourse the ratepayer’s have is a supposed State Insurance Commissioner looking out for them. Given that the last Commissioner who did that was literally fired by LePage when she raised, very publicly, this very issue, it makes one wonder just who the Insurance Commissioner is really working for. 2016 can’t come fast enough and every time we get a insurance rate increase notice the voter’s are remnded of just who’s interest’s are being put first. Tick tock, tick tock ……………..

  4. My mother who is 80 and has medicare (which pays only 80%  of anything) and who makes less than $12,000.00 a year in retirement pays OVER $4500.00 from that $12,000.00 for Blue Cross Blue Shield ‘gap insurance’……which leaves her less than $7500.00 a year to pay for 
    co-pays that Blue Cross doesn’t pay, medications, food, oil, electricity, car insurance, water, sewer, house taxes and any repairs that need to happen…..$625.00 a month……anyone who thinks that the insurance companies don’t make huge profits is blind AND stupid…..they make money hand over fist and this new ‘insurance reform’ from LePage is nothing more than a joke and a sad one at that.

    1.  Add to those tales, Spruce and TLMMSW, George Bush’s gift to the insurance companies called “Medicare, Part D” — for prescription coverage.  What a cruel joke!  Sign up with one of the companies and, during your first month, they can drop your most expensive prescription — while you are stuck with them for another eleven months.   Surely no one can believe that LePage would reform anything as egregiously profit-mongering as insurance!!  Never!

      1. Yes as LePage stated his reforms would NEVER be directed at Maine’s vulnerable populations like the elderly the disabled or children……as my 80 year old mother just received a letter from Mainecare this week telling her her benefits are cut……LePage  lies, he lies, he lies……and does it with a smile…….

      2. Medicare Part C was Junior Bush’s gift to the insurance companies, Part D was Junior Bush’s gift to the drug companies.

  5. I get a kick out of the GOP’s cognitive dissonance argument. Do you really want your medical decisions left to some bean counter from an insurance company? I’d take a bureaucrat 11 times out of ten !! 

  6. Having a free market to shop for health care is bound to lead to more competitive prices.  When there are only one or two companies offering insurance, it’s easy to set prices high and not worry about losing customers to other companies.  My small business has shopped around for insurance through many companies over the years and the answer is always the same:  “we could offer you a competitive rate through your professional association, but we don’t offer coverage in Maine.”  So yes, it will help to be allowed to purchase insurance across state lines and yes, it might affect Anthem’s business enough to rattle them into making their policies competitive.  Right now I’m paying high premiums for my employees and they barely use the care because the deductibles are too high.  It sucks for all of us, so nothing they CHANGE could make it worse.

      1. That is a good question.  Aetna, Anthem, and Harvard Pilgrim show up as offering insurance in Maine according to a US News website.  So I checked New Hampshire, that paragon of an American state.  They have insurance from Anthem, John Alden, and Time Insurance.  John Alden and Time have active licenses in Maine. 

        Then I looked at Florida, home of many of our snowbirds and possibly our governor when his term in office is over.  Florida has insurance from Aetna, Blue Cross/Blue Shield (that’s Anthem to us), Connecticut General (also licensed in Maine), Coventry (licensed in Maine), and Humana (licensed in Maine). 

        It’s a mystery to me.

        1. That’s easy – the insurance industry has agreed to carve up the country into regions of operations.

          Republicans have complained for years that Maine’s laws have kept out competition, when nothing could be further from the truth. The reason that WellPoint has 78% of the Maine market, and Aetna another 10%, is because other companies have agreed not to compete here.

          This paper had a fine report on it in the spring of 2011. Also see:

          http://www.americanprogress.org/wp-content/uploads/issues/2009/06/pdf/health_competitiveness.pdf

          1. You mean the free enterprise system doesn’t always work???  Sacrilege!!  Is it possible that the free enterprise system might need a little kick in the keister on occasion from gubmint?  (I read the link, by the way.  Good one.)

          2. When it comes to lobstering, if two get together and agree to sell their catch at a set price, it’s called price fixing.  If the insurance companies get together and set a price, it’s called good business

  7. Oh Yes!  Now this is much better that Obamacare, isn’t it!  Let me see now.  Repubs are fighting tooth and nail to repeal Obamacare.  Repubs railroaded this change through so fast, saying it would  be good for all. Repubs want to destroy Medicare and Medicaid.  I am beginning to think they just don’t like us.

    1. But Wait!!

      ( My Favorite infomercial line!)

      Now you can have Insurance Reform along WITH Trickle down Economics!

      Just Four Easy Payments !!!!

      $ 29.99

      But It won’t take effect rrrrright AAAAway!

      Just WAIT!

  8. Scott Thistle is a dishonest writer, and the Sun Journal and BDN are dishonest newspapers.  They don’t even bother to tell you HALF the story about “Consumers for Affordable Healthcare”…………huh. I wonder why not.   Now, why wouldn’t they put everything out in the open??
    Huh.

  9. A reminder that the language that created MGARA was taken almost verbatim from ALEC model legislation.

    Another part of PL90 repealed the law that barred health insurance companies from forcing high-cost customers off their current plan and onto another – in this case, MGARA.

    Of special interest is that despite how much Republicans continue to blast DirigoChoice, they created a state-run high-risk health insurance pool. As noted, MGARA is funded in part by a $4 per month tax on every person covered by private insurance, or:

    Privatize the profits, socialize the risks.

  10. One other clarification: the $4 tax used to fund MGARA is per person per month. So a family of four covered by a parent’s employer sponsored coverage would pay $192 a year in tax.

  11. All these people that were complaining about Obama’s insurance now have to bite their tongue..  This insurance they are complaining about comes from our illustrious governor.. I knew this but didn’t want to argue with these people..  Now if they can read they will see who is behind their insurance premiums going up.. Eat crow Obama haters.. It was your favorite governor that has you dipping into your pockets, not Obamacare..

    1. I got a Check for 269.00 for overpayment of Premiums from the Insurance company!

      I surely didn’t say brought to you by Paul Lepage!

      It was part of the mandate tat the Insurance Company would pay out a certain percentage of claims to premiums or give a premium refund!

      Thank You Obama!

      1.  It’s called a medical-loss ratio. Maine law allows health insurance companies to pocket 35 cents of every dollar in premiums they collect, to use for overhead and profit. The ACA (aka Obamacare) sets the MLR at 80% for individual plans, and 85% for groups. You received a refund on the difference between 65% and 80%.

      1. It really doesn’t matter to these people. Obama & his
        minions largest constituency are the ignorant, the selfish, the lazy, & the
        corrupt.   They play these people for their votes & lead
        them willingly walking in lockstep like lemmings on parade to board a Titanic
        that has already struck the iceberg. Unfortunately, the undertow from the
        sinking ship will pull the rest of us down through no fault of our own.  That is the real tragedy.

  12. The tea party parrot Republicans and their fearless leader Tea Party Paul Richard LePage passed “insurance reform” in the last legislature in which they controlled both the Maine House and Senate. The bill was ramrodded through by Senate President and current second district congressional candidate Kevin Raye and Speaker of the Maine House “Diaper” Bob Nutting. The bill was written by the insurance companies (kind of like having bank robbers write a bill on Bank Robbery). We were all promised that rates would drop like a rock. The then Commissioner of the Department of Insurance was prevented from reviewing the bill prior to its passage. Now this bill which was no more then a gift to insurance companies from the tea party parrot Republicans and Tea Party Paul  is starting to hit Mainers right where the experts opposed to its passage said it would……right in the wallet. This tea party parrot insanity has to end. Do your part to end it on November 6th.

  13. Healthcare insurance is killing us all.

    Look at what else is coming too;

    http://www.atr.org/days-taxmageddon-a7203

    I tried to tell / warn people that the 10% bracket is going away, but they did not believe me.

    There was also a story a few days ago about the CBO saying that they underestimated the cost of Obamacare again, and that many more people would be taxed…I will see if I can locate it.
    There is so much going on its hard to keep track of everything.

    1. I think this is the story I was writing about;

       http://taxfoundation.org/blog/obamacare-penalty-tax-now-estimated-hit-6-million

    2. The CBO’s latest calculations still say that the Affordable Care Act (Obamacare) will reduce the deficit.

      Your links are to far right opinion sites. They are completely unreliable,

  14. Mainers will find that come tax time they will see savings in their coverage under the Affordable Care Act when they are allowed to deduct the premiums from their bottom line!

  15. They claim rate increases are down “overall”. But if you live in a rural area that “overall” doesn’t apply. Leave it to the Republicans to craft an insurance law that takes the “affordable” out of the Affordable Care Act. God help us if they get the White House in November.

    1. Was this a strictly party line vote or was the other party in approval also.  I often wonder where the facts are in these articles and where we come up with who is at fault.

  16. I have a solution to this problem.

    Throw out every republican that voted for this krappahola.

    Replace it with Single-Payer.

    Problem solved.

    YEssah

  17. If you want real insurance reform in Maine then force the legisvermin to stop providing themselves practically free health insurance coverage (including retirement coverage) for their part time jobs.  When those who make the rules have to suffer under the results of their own misguided policies (both Repubs and the Dems) then you’ll see real reform.  Until then the they’ll just say “Let them eat cake”.   Tell every legislator who knocks on your door that you expect them to repeal their taxpayer provided health insurance and really reform the Maine insurance market.

    1. I agree. Elected State lawmakers and elected state officials like the Governor are not state employees and should not be on the state employee health plan.

  18. I have to agree with  you oldmainer if the lawmakers started cutting their own perks and bennies that have been piled on the backs of the people for years you would see a balenced budget in the very near future.They have the best partime,smokescreen,fool the taxpayer job there is.Let them pay for their own insurance.  

  19.  Weren’t the Maine Dems in control of the legislature from 1994 until 2008? Why didn’t they keep BC & BS non-profit?  Weren’t those inept thieves that stole the MTA and Maine state housing blind part of the inept legislature then? Make the part time legislators buy their own insurance and they’d have some incentive to really tackle health insurance costs.  As it is now they pay lip service to reform and couldn’t care less what actually happens to the rest of us.

    1. Blue Cross is a huge national insurance company. I really doubt that the Maine legislature has any  say over their status as a non profit.

      The MTA fiasco was one corrupt man who was hired into his job during the McKernan administration and he was brought down by an investigation initiated and authorized by the Democratic controlled legislature in 2009.

      The audit report of the MSHA found no wrongdoing.

      Yo got one thing right though. Legislators give themselves a VERY sweet deal on their own insurance and that is a real problem.

  20. LOOKS TO ME THAT ANTHEM IS AFRAID OF COMPETITION COMING INTO THE STATE OF MAINE.

    I personally know of a couple which only the husband can work.   The wife is disable.   He pays over  $800.  a month from his monthly income for Anthem’s insurance.   He is at a retirement age, while his physically demanding job is making it more difficult for him to continue.  He is now in a quandry of deciding whether to continue working just to pay for the insurance.  

    Anthem’s insurance profit margin has affected seniors for years.   My deceased parents wrestled with their cost for years.  

  21. Of the 11 members of the board, five are insurance company representatives, another is an insurance broker, another is a small-business person — whose small business is in insurance. The other board members include a car sales businessman, two representatives from the medical community and a former credit union president.  My god you cant make this crap up. Talking about all the foxes watching the hen house. What elitists that we live amongst. Damn.  Want a good read take a look at Richard Wolff ” Occupy the Economy ” on CSPAN.

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