Can Maine Democrats, Republicans come together on insurance overhaul?

AUGUSTA, Maine — They branded it the “rate hike law” on the campaign trail this fall. And now that Democrats have taken back control of both chambers of the Maine Legislature, one of their first targets is the health insurance overhaul package passed by House and Senate Republicans last year and signed into law by Gov. Paul LePage.

Rep. Sharon Treat, D-Hallowell, submitted legislation before this month’s elections to repeal or substantially alter one of the Republicans’ signature legislative achievements from the past two years. Now she’s working out the specifics.

“I’m not interested in just sort of rolling back the clock to the day before the Republicans took over two years ago,” Treat said. “I want to take a thoughtful approach to it.”

Ultimately, though, Treat and her Democratic colleagues could face a significant obstacle to making major changes to the law: LePage supports it and could veto any attempts to alter it. “The governor has no interest in repealing this health insurance reform,” spokeswoman Adrienne Bennett said.

The insurance overhaul bill — called Public Law, or PL, 90 — was an attempt to spur more competition in Maine’s health insurance market by making it easier for insurers to offer new plans for small groups and individuals and by allowing small businesses to band together and negotiate more favorable rates.

The bill also created a high-risk pool — or reinsurance program — to protect insurance companies from the high costs of covering patients who require the most medical care. The law funds the program in part through a $4 assessment on the monthly premium of anyone with private insurance.

In addition, the law allows insurers to charge different rates based on patients’ age, geography and health status. Proponents say that part of the bill is an attempt to woo more young, healthy patients into the marketplace by allowing insurers to charge them less.

Eventually, the law will allow insurers to market plans certified in other states to Maine consumers.

“It gives people choices of different products and creates competition among more than three insurance companies,” said Sen. Rodney Whittemore, R-Skowhegan, who chaired the Legislature’s Insurance and Financial Services Committee and co-sponsored the insurance reform bill. “If you had 12 companies all competing for that market, that’s definitely going to drive that cost down.”

But Treat said the law does away with important consumer protections and has disproportionately caused premium increases among small businesses in rural areas.

“We heard loud and clear during this election that this law was not working for people and small businesses,” she said.

One provision Treat is sure to target in her legislation allows insurance companies to raise rates in the small-group market — which includes small employers — by 10 percent or less without approval from the state’s Bureau of Insurance. Democrats fought unsuccessfully earlier this year to require that approval.

Treat, who has served as the ranking Democrat on the Insurance and Financial Services Committee over the past two years, also has her eye on PL 90’s reinsurance program. Since the Obama administration’s Affordable Care Act also provides for a reinsurance program, she said, Maine should set up a program more closely in line with federal law.

Democrats started calling the health insurance reform law the “rate hike law” in September when the left-leaning group Consumers for Affordable Health Care published an analysis that found premiums had increased for 54 percent of individual policyholders in Maine and 90 percent of small-business policyholders since the law had taken effect.

“There was a lot in PL 90 that has been harmful and has impacted individuals and small businesses,” said Mitchell Stein, the group’s policy director. Small businesses are “seeing higher rates than they would have otherwise.”

But supporters of the insurance reform bill responded that premium increases have been smaller thanks to the new law and that fewer policyholders are now seeing increases.

“It’s easy to find a company who’s had an increase,” said Joel Allumbaugh, who runs an insurance brokerage firm and heads up health reform initiatives at the right-leaning Maine Heritage Policy Center. “Increases are not a new phenomenon for companies and individuals with insurance in Maine.”

What’s notable about the health insurance reform law, he said, is that it’s spurred insurers to introduce a range of new options for individuals and small businesses in Maine.

Data published in September by the state’s Bureau of Insurance showed that in the year since PL 90 took effect, 11.4 percent of small groups renewing their policies have seen premium decreases, compared to 3.5 percent that saw decreases in the year before the law took effect. The small groups seeing lower insurance rates are more likely to be in southern Maine, the data show. Before PL 90, according to the Bureau of Insurance, there was generally little geographic variation in insurance rate increases and decreases.

The data also show that when small groups were quoted higher rates to renew their policies, the rates increases were slightly more likely to fall in the 40 percent to 80 percent range after the law took effect than they were before. Rate increases between 0 and 20 percent were slightly more common before the insurance overhaul took effect last year.

Those small groups being quoted rate increases of 40 percent or more were more likely to be in northern and eastern Maine, according to the Bureau of Insurance.

“It disproportionately affected small businesses, especially in rural areas, and especially those small businesses that have an older workforce,” Treat said.

A substantial portion of small business are still experiencing rate increases when they renew their insurance plans. But since PL 90 has taken effect, small businesses have more options in the insurance marketplace and don’t have to renew the plan that’s going to cost more, said Allumbaugh.

Since PL 90 loosened some limits on the size of insurance deductibles, Allumbaugh said, that’s opened the door for insurance companies to offer new small group and individual policies in Maine.

“We’ve literally seen dozens of new products being offered,” he said. “They’re priced quite well.”

As Treat pushes for changes to PL 90, she said she intends to work with Republican colleagues. And Republican supporters of the bill like Whittemore, the Skowhegan senator, and Rep. Kenneth Fredette of Newport, the newly elected House Republican leader, say they’re open to working with Democrats on improving the bill.

“If things aren’t working, then we need to look at those things,” Fredette said. “We certainly are willing to work across the aisle to see what can be improved.”

If majority Democrats can entice enough Republicans to go along with a proposal to alter the insurance law, they could form a veto-proof bloc against LePage, said Dan Demeritt, a Republican consultant and former LePage communications director.

“I think full repeal is unlikely,” he said. “But I’d be very surprised if some Republicans aren’t willing to consider ways to improve the overhaul.”

Matthew Stone is the State House Bureau reporter for the BDN.