VTDigger

Editor’s note Garrett Martin is the executive director of the Maine Center for Economic Policy [1]. He has been observing the effects of changes to Maine’s health insurance laws made in 2011.

Vermont’s courageous effort to provide health insurance to all its residents is an inspiring model for other states. Maine’s recent experience? Not so much.

That’s why it’s so surprising that Jeff Wennberg of Vermonters for Health Care Freedom recently suggested that Vermont embrace health insurance deregulation modeled on recent changes in Maine. If anything, Maine’s new policy is useful only as an example to be avoided. Our health care costs are still growing quickly and the number of Maine residents who don’t have insurance is increasing.

Premium increases are largest for precisely those who can least afford it — seniors and small businesses, especially in rural Maine. Small, rural health care facilities may be forced to close their doors, leaving thousands of Mainers without nearby care. Clearly, a power shift from regulators to insurance companies has weakened consumer protections.

Proponents of Maine’s new health insurance law claim that premiums have gone down. But they’re only presenting a small part of the picture – and they’re not even getting that right. One recent report cited a 60 percent drop in rates for one individual health plan, but failed to identify the real reason for the drop: The plan no longer covers maternity care and shifts significantly more costs for prescription drugs and out-of-network care to consumers.

That misleading analysis aside, individual health insurance rates for some Mainers will decrease, but not because of any gains in market efficiency. The new law attempts to reduce premiums in the individual insurance market using a $22 million public subsidy. That’s right; Maine residents are subsidizing private insurance companies in an attempt to lower premiums.

Despite this subsidy, Maine’s older residents in rural areas are actually seeing their rates go up significantly, because the new law gives increased power to insurance companies to vary their rates — by as much as 650 percent when fully implemented — based on age and geography.

What’s more, the subsidy only applies to individual plans, which are a small segment — 35,000 people, or less than 4 percent — of Maine’s overall health insurance market. More than 100,000 Mainers get health coverage through their employers in the small-group market and the impact of Maine’s new law on these folks is alarming.

Most small businesses with group plans are paying more than ever before for health insurance. Coupled with price discrimination based on age and geography, small businesses with older employees in more rural parts of the state have seen rate increases as much as 70 percent.

Most small businesses with group plans are paying more than ever before for health insurance. Coupled with price discrimination based on age and geography, small businesses with older employees in more rural parts of the state have seen rate increases as much as 70 percent.

Jim Miller, who owns WoodenBoat Publications Inc., in Brooklin, Maine, is a small business owner who has been hurt by the state’s recent health insurance reform. Talking about the impact of the new law, he said, “They’re basically selling health insurance based on your zip code and your age, and for this company, both of those are going against us.” In another example, Reel Pizza Cinerama in Bar Harbor, which employs 12 people, has seen its health insurance premiums go up more than 95 percent in the last two years.

There is no relief in sight for these small businesses and their employees. Proponents of the new law recently tried and failed to create a public subsidy for insurance companies in the small-group market. It was too expensive.

Glossing over the subsidies, the law’s champions argue that it will foster competition in the health insurance market. How? By gutting regulations that protect consumers from unfair rate increases. Under Maine’s old law, rate increases in the individual market couldn’t take place without approval from the state. The new law effectively gives insurance companies a free pass on any rate increase less than 10 percent.

Here’s how that plays out: Last year, before the new law went into effect, Anthem proposed a rate increase of 9.8 percent and the company was allowed 5.2 percent, saving Maine consumers millions of dollars. Today, the 9.8 percent increase would take effect without scrutiny.

Other changes under the new law give insurance companies more power to influence where people get care, putting at risk several rural health care facilities that have thin margins but nevertheless provide care in areas of Maine where there are few, if any, other options. To be fair, part of the financial distress of these centers has to do with low reimbursement, from private insurance companies and from Medicare and Medicaid, for primary care physicians and basic health services. But Maine’s new law still shifts even more power to insurance companies and they – not patients or doctors – benefit most.

Vermont should stay the course with its efforts to ensure access to affordable health care for all its residents. Don’t let the false choices and misguided assumptions underlying Maine’s insurance company giveaway discourage your promising efforts. Those of us in Maine and elsewhere who believe in an approach that delivers better health outcomes for all people are counting on you.

——————————————————————————–