Forum Debates Impact of New Health Insurance Overhaul Bill

On Wednesday, July 20th, the Maine Health Access Foundation, the Maine Medical Association, the Maine Development Foundation and Quality Counts hosted a forum on LD 1333 which recently passed the Maine Legislature and imposes major health insurance reforms.  While the session was interesting, the five panelists raised more questions than they answered.  Wendy Wolf, CEO of the Maine Health Access Foundation, set the stage in her opening remarks, “This law represents one of the most significant changes in health insurance since the 1990s.”  The panelists then offered their opinions on the law.

Eric Cioppa-Acting Insurance Superintendent

• -The bill creates a high risk pool for high cost individuals and imposes a $4 – $6 surcharge on insured individuals.  A $4 surcharge is expected to bring $25 million into the high risk pool.
• -Since 1999, Anthem Blue/Cross Blue Shield has raised rates in the individual market 288 percent and this bill is designed to target the 135,000 Mainers who are either in the individual market or employed by companies with fewer than 50 employees.

Joel Allumbagh-Maine Heritage Policy Center/National Worksite Benefit Group

• -LD 1333 will impact the individual and small group markets the most
• -The unchecked  rise in health care expenses is what is driving rate increases
• -Average rate increase he’s seeing in the small group market is near 30%
• -Every state but three now has obesity rates over 20% of the population and diabetes cases has followed that rise and increased healthcare costs associated with obesity.  For this reason, wellness needs to be incentivized in the system.
• -LD 1333 will allow the market to function better in the small group and individual markets
• -The system needs to pay for quality over volume of services
• -Anecdotal evidence that young people want to enter health care market, but aren’t because it’s just too expensive for them

Garrett Martin-Maine Center for Economic Policy

• -LD 1333 cuts both ways.  It shifts costs from young/healthy folks to old/rural folks
• -Actuarial analysis on the law’s impact has estimated the following impact on rates in the small group market around the state: Lakes, no change/ North Central, +6%/ South, -4%/Midcoast, -1%/Down East, +9%/North, +17%
• -Because of LD 1333, there is no longer a rate review process in the law.  Under the old system, Anthem’s 9.7% increase request was reduced to 5.6% through the review process.
• -Assumptions regarding the number of young and healthy folks coming into the market may be overstated. There may not be enough young, healthy folks who purchase insurance to make the proponents projections.
• -11% of the population create 90% of the cost of health care.  Where is the focus on serving them better and lowering the associated costs?
• -The new law gives more power and profit to the providers-5 of the 11 seats on the new board of oversight have been reserved for providers.
• -In a rush to create competition in the market there may be unintended consequences.
• -Rural hospitals will be adversely impacted by this law, and health care spending drives rural economies.
• -People currently in the small group market may migrate to the individual market as it gets healthier.

Jeff Austin-Maine Hospital Association (MHA)

• -Hospitals are not sure this law is good or bad, it may be a mixed bag for them.
• -MHA opposed the repeal of rule 850, which is designed to protect individuals from being forced to travel for cheaper procedures by insurers. LD 1333 doesn’t repeal rule 850, but it is unclear how changes to that rule will affect rural health care providers and their patients.
• -While there are cost discrepancies in hospitals for the same procedures, the patient market at each hospital needs to be considered, as the hospitals with the highest costs have the oldest, poorest patients.
• -LD 1333 won’t have much impact on the 11% of the population/90% of the cost issue.
• -The MHA is worried about what happens when the $4/policy holder surcharge doesn’t cover costs. That surcharge is capped at 6% in statute in this law.
• -Good outcomes and cost controls need to include a measure of individual responsibility, employers need to play a role in driving wellness initiatives to control their costs.

Peter Gore-Maine State Chamber

• -Over 1,000 businesses surveyed in the Chamber/MDF “Making Maine Work” report.  By far, the most important issue for respondents was lowering health care costs.
• -There are a lot of unknowns in the legislation and there will be winners and losers in the business community.
• -While there are a lot of unknowns, the Chamber ultimately saw this as a legitimate attempt to change the status quo which was unsustainable.
• -Many of the provisions in the law have been discussed in different legislatures over the past 20 years.
• -While the law doesn’t work toward lowering costs, neither does  the Affordable Care Act.