What’s the real story with health insurance rates in Maine?

May 16, 2012 by

Today’s Maine Wire story on the impact of last year’s health insurance law passed by the Maine legislature paints a too-good-to-be-true picture about declining health insurance rates in Maine. That’s because it is.

Citing a 60% drop in individual health insurance rates, the Maine Heritage Policy Center (MHPC) declares victory on this law. The problem is that they’re not telling the whole story. They’ve cherry-picked data for one carrier, for one product, in one market, at one point in time.

It’s like saying you’re a straight A student because you got an A in gym without checking your grades in the rest of your classes.

For starters, the quality of the products MHPC compares are completely different – one covers maternity, the other doesn’t – and that’s just the tip of the iceberg. Even if the products were the same, the story differs depending on your comparison point.  For example, for the lower deductible version Maine Wire cites in its story, a 60 year old individual will see a 48% drop in rates. Yet, the high deductible plan offered by the same carrier indicates a 21% increase for a 60 year old.

The real impact of the health insurance law, P.L. 2011, Chapter 90 or PL 90, is much more complex. Critically important information is still unavailable and has yet to be fully sorted out. From the beginning, MECEP acknowledged that some people in the individual insurance market could see significant rate decreases. This is because PL 90 subsidizes the individual market to the tune of $22 million. Here’s a headline you’re unlikely to see on the Maine Wire: “Public Subsidies to Health Insurance Companies Reduce rates for Less than 3% of Maine People.” – But that’s an important part of the story.

Of course, the new health insurance law doesn’t just affect the individual market – the focal point of the Maine Wire story – it also has impacts on the small group market. Almost three times as many people receive their coverage through the small group market as an employee or owner of a small business compared to the individual market.

The results for the small group market are more troubling. Small businesses with older employees in more rural parts of the state have seen huge – as much as 70% – increases in their rates. PL 90 gave insurance companies more power to vary their rates for the small group market based on age and geography while providing no public subsidy. The result, there are some winners in the small group market but there are a lot of losers as well.

In a failed attempt to address this glaring flaw in the original law, Senator Jon Courtney introduced a bill this session to create a comparable subsidy for the small group market. But to achieve comparable results in the small group market was prohibitively expensive and legislators quickly abandoned the idea.

Today’s Maine Wire release is more about politics than policy. The bottom-line is that the Maine Wire jumped the gun in declaring victory and is cherry-picking information to spin a premature tale of success.

MECEP has always acknowledged that PL 90 would create winners and losers. We have consistently argued that PL 90 gives more power and profits to insurance companies and does little more than rearrange the deck chairs on a sinking ship. The ultimate problem is not one of insurance costs; its health care costs. Until we tackle that challenge and base our decisions on apples to apples comparisons, we will not achieve our goal of access to quality affordable health care for all Mainers.

5 Responses to “What’s the real story with health insurance rates in Maine?”
  1. And this is the heart of the matter, isn’t it?

    The shell game of cost allocation across the pool of insured premium payers creates an illusion that has been masterfully executed by the Maine Heritage Policy Center.

    I was terribly confused by their report because of a rate increase notification received last week from Anthem on a policy for a mid-coast small business owner I know. She was shocked.

    Checking the filing, I discovered that the only way to lower the premium was to switch to a new fangled plan with insane co-pays, a deductible that would bankrupt her before she ever reached it, and which doesn’t even cover a bunch of very important family medical procedures including maternity coverage!.

    Healthy kids may be getting a break but she’s going broke.

  2. Garrett Martin says:

    Chris,

    Thanks for your comment. You’ve hit the nail on the head. Even folks who think they’re getting a better deal may be in for a rude awakening when they actually find out what’s covered and what’s not and how much they’re on the hook for in terms of co-pays, etc. Sadly health insurance is out of reach for an increasing number of people and Maine’s new health insurance law is not the solution.

  3. Alice Knapp says:

    Good piece Garrett, thanks. Howeever, high health care costs are not the only problem with our health care system. While defenders of the status quo remain curiously silent on the issue, any reasonable assessment of costs must consider and highlight the senseless administrative expense of our wildly fragmented and grossly inequitable healthcare system under which a goodly chunk of our population enjoys near free or heavily subsidized publicly funded healthcare (e.g. Medicare, MaineCare, military healthcare, federral and state – including legislators, who I regularly note are the only “seasonal” state employees who get year round coverage). I also keep pointing out that under our system, the uninsured and increasing numbers of underinsured folks through their tax dollars help provide a benefit they and their families need but can’t afford to someone else, which is like paying for public education but your kid can’t go. I look forward to MECEP’s objective analysis of a single payer healthcare system in Maine.

  4. Garrett Martin says:

    Alice,

    Thanks for your comment and for being consistent in highlighting the flaws in our current health care system and the need to measure our efforts by whether or not everyone has access to affordable, quality health care.

  5. Lori Martin says:

    Garrett Martin:

    Please keep me apprised of information you acquire in the future . . . . you are a great resource and I would appreciate further contact (information) in the future. Lori Martin (a.k.a. . . . paying out the wazoo for individual health care premiums)

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