The long and complicated road to health care reform is winding its way through Maine and the United States. Sens. Olympia Snowe and Susan Collins support reform and have proved pivotal in the Senate debates. They have championed the concepts and reforms they support and battled those they feel aren’t the right prescription for our state or our country.
Maine’s health plans could not agree more that comprehensive health care reform is needed with a laser focus on affordability and controlling underlying drivers of high health care costs such as overuse of supply-sensitive care and diagnostic testing. These reforms go hand in hand with efforts to expand coverage to all Americans.
We’re disappointed that neither the Senate bill nor its counterpart passed by the U.S. House of Representatives does nearly enough to make health care affordable for Mainers. The proposals being debated in the halls of Congress not only fail to address the things that drive rising health care costs but they would also further inflate the cost of coverage, making health care more expensive for working families.
Some pieces of the new Senate compromise will make our cost problems worse, more so because Maine is largely rural and poorer than many of our neighbors. For example, one of the goals of health care reform is to make coverage more affordable, yet the proposed annual $6.7 billion health insurance premium tax in the Senate will have the opposite effect, by increasing costs for families and employers across the country. The Congressional Budget Office has stated that new taxes on health plans will result in higher premiums for working families and individuals — and that makes sense, because new taxes certainly won’t reduce the cost of health care.
These taxes would increase costs for families and employers at a time when they are already struggling with rising health care costs. The new tax is nondeductible and is layered on top of existing state and federal taxes paid by health insurance plans, including: premium taxes, state and federal income taxes, employment taxes, sales and use taxes and property taxes.
For Maine specifically, insurers already pay a premium tax of 2 percent and a Dirigo Health Plan tax of 2.14 percent on paid claims. We have among the highest health care costs in the country and some of the highest premiums as a result.
Ask any family in our state about why health care needs to be fixed and they will respond that care has become unaffordable and that reform must put the cost of care back within reach. Yet the bills Congress has delivered after months of negotiations don’t do enough to make care more affordable and could result in employers and individuals dropping or scaling back on coverage in order to pay for a broader expansion of coverage nationally. This isn’t real reform that will work well for Maine or America.
Maine has already adopted many of the reforms being proposed at the federal level such as enacting community rating and guaranteed issue, but without an accompanying coverage mandate, these reforms have had the unintended consequence of forcing premium costs higher and encouraging people to move in and out of the insured pool.
It is important to understand that health insurance premiums are a reflection of health care costs. Until we address health care costs, insurance will continue to be expensive.
There are many factors involved, but one of the key drivers in Maine is the cost shift between public payers such as Medicare and Medicaid onto private insurance companies’ policy holders. Estimates are that insurance companies pay $1.35 for every dollar’s worth of care their members receive at hospitals, and the numbers for independent physicians and other providers are even higher.
The combination of an increasingly older population in the state covered by Medicare, roughly 14 percent, and a large population on Medicaid — roughly 1 out of 5 Maine people is insured by Medicaid — makes cost shifting a serious problem for our state. The low reimbursement and high enrollment in Medicaid and Medicare serve to exacerbate this issue. Until these issues are addressed, it will be difficult to make health insurance more affordable.
Both of Maine’s senators have made it clear that they have concerns with the Senate bill as its currently written and are still working to fashion a stronger reform bill. They should be commended for their positions and for their commitment to seeking solutions to make health insurance more affordable for Maine people and businesses.
Katherine Pelletreau is executive director of the Maine Association of Health Plans.