Bill to prevent health insurance rate hikes won’t be heard in 2012

BY RAMONA DU HOUX

December 12th, 2011

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A measure that would prevent unchecked rate hikes on health insurance premiums by insurance companies will not be heard by lawmakers in the upcoming session in January. Republican legislative leaders refused an appeal to allow the bill to be considered.

“Maine families and small businesses are the ones that will literally pay the price of this shortsighted decision,” said Rep. Anne Graham, D-North Yarmouth, who submitted the proposal to help fix problems resulting from the rushed Republican insurance overhaul, referred to as LD 1333 or Public Law 90. “This is a bill that would have prevented insurance companies from excessively hiking rates without any kind of oversight. Maine families and small businesses just can’t afford to put more money in the pockets of Big Insurance.”

LD 1333, which took effect October 1, 2011, was ramrodded through the Legislature last spring with the aid of the Maine Heritage Policy Center and insurance interests. The law changes the formula regulating how health insurance companies charge small businesses and their employees, based on their age, occupation, and geography. These changes in “community rating” have meant that some businesses in central Maine are now facing 60 percent premium increases. One Presque Isle business reported that they were facing a 90 percent increase in company health insurance costs.

“Some of our members who were up for policy renewal in October have voiced serious concern over these enormous rate increases they are being quoted,” said Maine Small Business Coalition Director Nate Libby. “For them, it’s the same insurance company, the same policy, the same employees, but with new rules for the insurance companies to play by. These new ways of penalizing Maine businesses, who offer their workers health insurance, reward long-time employment, and happen to be located in rural Maine, are unfair and damaging to our rural economies and communities.”

When Anthem recently proposed a 9.7 percent increase in individual rates, the Bureau of Insurance limited it to 5.2 percent after a thorough review. Under the new law put in place by LD 1333, the bureau could no longer review rate increases on small businesses or individuals of up to 10 percent.

Graham’s proposed bill, An Act to Enhance Affordable, Quality Health Care in Maine, would have restored the oversight role of the Maine Bureau of Insurance in the insurance rate review process, preventing excessive price hikes by insurance companies. It also would have established a council to monitor health-care accessibility and quality, as well as payment reform and expand consumer oversight of the new reinsurance pool. The pool is funded by a new tax on policyholders and is primarily overseen by insurance executives.

“I’m not surprised, but I am disappointed that Republican leaders put insurance industry profits before Maine people,” added Graham.

LD 1333 allows insurance companies selling individual policies to set rates based on age at up to five times higher than the lowest rate. There are no limits on rate changes, depending on where you live or what kind of job you have.

Small businesses in Hancock, Washington, and Aroostook counties are seeing insurance premiums rise more than 60 or 70 percent.

“The more we study the new health insurance law, the more we see the faulty assumptions on which it is based,” said Garrett Martin, executive director of the Maine Center for Economic Policy, which is analyzing the implementation of PL 90. “Charging younger individuals in more populated areas of the state less will increase costs for older people in more rural parts of the state. Small businesses won’t benefit from the law’s reinsurance program, even though they pay a portion of its costs. As it stands, the real winners are the insurance companies that will gain more power and profits at the expense of Maine consumers. We are disappointed that the Legislative Council turned down efforts to restore balance to Maine’s health insurance market.”