Cross-border health insurance sales proposed

Posted April 12, 2011, at 9:35 p.m.

AUGUSTA, Maine — With important health insurance changes looming as a result of the national health reforms contained in the Affordable Care Act, Maine lawmakers on the Insurance and Financial Services Committee heard a cluster of proposals Tuesday aimed at promoting the purchase of health insurance across state lines.

Maine’s health insurance rates are among the highest in the country, and some have called for the law to be changed to allow Mainers to purchase policies sold in other states where regulations are less burdensome and rates are lower.

But opponents have argued that Mainers who purchase insurance in other states would forfeit the consumer protections provided by the Maine Bureau of Insurance, which oversees the industry and enforces regulations established by the Legislature. And since many of the people who would be most interested in out-of-state coverage would be relatively young, healthy individuals looking to purchase inexpensive, high-deductible plans, critics say the older, sicker people left behind would see their monthly premiums grow even more expensive than they are now.

Under the provisions of the Affordable Care Act, states will be encouraged to create regional compacts beginning in 2016, two years after a contentious individual mandate goes into effect and insurers are required to provide “affordable” plans for all Americans. The bills presented Tuesday aim to get Maine doing business with other states well in advance of the 2016 target.

Sen. Nancy Sullivan, D-Biddeford, a longtime opponent of cross-border insurance sales, proposed authorizing insurers in other states to market their plans in Maine and vice versa, providing certain consumer protections and other requirements are met.

A bill introduced by Rep. George Hogan, D-Old Orchard Beach, would require Maine Insurance Superintendent Mila Kofman to meet with her colleagues in other New England states to explore the potential of a regional compact. In the event that a Mainer encounters problems with insurance purchased out of state, Hogan’s bill would require the Maine insurance superintendent to resolve the problem.

“I am in sincere hope that … we can get some relief and some competition for our constituents here  in Maine,” Hogan said.

Rep. Ryan Harmon, R-Palermo, also wants to open up cross-border insurance sales, first requiring Mainers who purchase coverage to sign a waiver acknowledging that policies purchased in other states may not adhere to Maine standards.

“States are unlikely to attract customers by offering inferior products,” he said. “There is no reason not to allow consumers to choose where to purchase their insurance.”

Freshman Rep. Wayne Parry, R-Arundel, said Maine should just replace its own insurance laws with those of neighboring New Hampshire, which is often held up as a model of free-market competition. “I know this is a simplistic way of looking at it, but sometimes we get too complicated with the issues,” Parry said.

Rep. Amy Volk, R-Scarborough, took a tip from her veterinarian in suggesting that Maine allow members of professional associations to purchase insurance in other states.

And Rep. Jonathan McKane, R-Newcastle, invoked the Affordable Care Act in seeking to authorize a health insurance compact between Maine and New Hampshire. McKane’s bill would require policies sold to Maine residents from companies based in New Hampshire to meet many of Maine’s regulatory standards.

Public testimony largely opposed the bills, citing concerns with lost consumer protections, an overall increase in the cost of some policies, and a loss of market share for Maine-based insurers.

Susan Lamb of the Maine Chapter of the National Association of Social Workers reminded lawmakers that Maine’s consumer protections and mandated coverage regulations were established by their legislative predecessors “who were appalled to learn what was not covered” in Maine health insurance plans. Breast reconstruction after cancer surgery, hearing aids for children, maternity benefits for unmarried women and treatment for alcohol addiction are now required benefits because they once were not, Lamb said.

Christine Ossenfort, speaking for Anthem Blue Cross and Blue Shield, said rather than encouraging Mainers to take their business out of state, Maine lawmakers should focus on decreasing regulations in Maine.

“The answer is not to bend the rules for out-of-state companies, it is to address the rules for the companies doing business here now,” she said.

A work session for the bills is scheduled for 9:30 a.m. Friday, April 29.

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