Committee endorses far-reaching changes to health insurance regulation

Posted May 01, 2011, at 6:45 p.m.
Last modified May 05, 2011, at 4:36 p.m.

AUGUSTA, Maine — Democrats and consumer advocates are crying foul over an omnibus bill that seeks to rewrite key provisions of Maine’s health insurance laws. Republicans and business and conservative groups say the long-sought changes are needed to jump-start competition in the health insurance market and bring down the cost of coverage.

The bill, LD 1333 sponsored by Rep. Wesley Richardson, R-Warren, was passed out of the Insurance and Financial Services Committee on Friday afternoon with a party-line “ought to pass as amended” vote. The committee spent less than an hour reviewing the measure. Committee Republicans said that the individual provisions of the bill have been proposed and debated for a number of years and are familiar to most lawmakers.

“It boils down to this,” Richardson said in an interview on Saturday. “The other party does not like this stuff; it’s as simple as that … we could pound it for another two weeks and we would still end up with the same situation we had yesterday in the committee room.”

But Democrats on the committee decried not only the disparate content of the measure but also what they said was a fast-track and partisan process by which it was approved.

“I have been in the Legislature a long time and I have never seen anything that was handled like this,” said committee member Rep. Sharon Treat, D-Hallowell, who was first elected in 1990 and has served in both the House and Senate.

Treat said in an interview on Saturday the bill is designed to have a far-reaching impact on Maine’s health insurance market and should have been backed up with current actuarial data and analysis to help lawmakers, especially unseasoned first-termers, understand the financial and regulatory impact and the complex relationship between its provisions.

Introduced at a public hearing on Wednesday of last week, Richardson’s bill started life as a four-page proposal to allow the expansion of “community rating bands” that limit how much insurers can vary what they charge for individual or small-group coverage based on the age, occupation, and geographic place of residence of the policyholder.

State regulations in place for many years now limit that range to a 1:1.5 ratio, meaning, for example, that a policy that costs $300 for the lowest-risk policyholder can cost no more than $450 for the highest-risk. Richardson’s bill would expand the range over time to 1:5, meaning the highest-risk policyholders could be charged as much as $1,500.

But the original bill was scrapped at the public hearing and replaced with a 24-page draft amendment that included the community rating expansion as well as a number of other changes to existing insurance regulation. On Friday morning, it had morphed into 29 pages. By the time the committee leaders called for a vote, over vehement Democratic protests, two more provisions had been added.

In addition to Treat’s repeated requests for more information and the possibility of building bipartisan support, the vote was protested by a number of other Democrats on the committee, including Sen. Joseph Brannigan, D-Portland, Rep. Adam Goode, D-Bangor, and Rep. Henry Beck, D-Waterville.

Measures included in the final bill and approved on Friday by the Republican majority are:

• Creation of a high-risk insurance pool to help pay for Mainers whose health care costs exceed $5,000 a year. Based on a plan in Idaho, the pool would be funded by a $4 assessment added to the monthly payment of every policyholder in the state.

• A process for assigning policyholders to that high-risk pool based on pre-existing health status.

• Elimination of a rule that limits how far insurance companies can force policyholders to travel for medical services.

• Elimination of the State Health Plan, which regulates the expansion of health care facilities and services.

• A provision to allow Maine-registered insurance companies to sell coverage from out-of-state companies that may not comply with Maine mandates.

• A provision to allow Maine businesses to form self-insured associations with coverage not subject to state mandates.

Tarren Bragdon, CEO of the politically conservative Maine Heritage Policy Center, served on the business-friendly work group that drafted the bill. The group also included employers interested in forming self-insured associations, insurance carriers, Republican legislators and representatives of the Maine Hospital Association and the state Department of Professional and Financial Regulation.

The work group’s goal in drafting the legislation was to “increase the [insurance] choices available to Maine families and small businesses,” Bragdon said Sunday.

The group did not seek input from Insurance Superintendent Mila Kofman, whose office is responsible for regulating the insurance industry as well as for collecting, analyzing and disseminating actuarial data and other information about the industry and its operations.

Kofman, who was appointed to a five-year term by former Gov. John Baldacci, was out of town for some of the time the work group was meeting, Bragdon said Sunday, but attorneys from the department did participate in some meetings.

Bragdon pointed out that the department in 2007 published an extensive actuarial report in response to proposed changes in Maine insurance regulation. Although some changes have occurred since then, the group did not feel a new study was warranted at this time.

“There is nothing new about any of this,” Bragdon said.

According to attorney Joe Ditre, executive director of the nonprofit advocacy group Consumers for Affordable Health Care, the bill will have a profoundly negative impact on Maine consumers, especially those who live in rural areas, the elderly, small-business owners and Mainers with chronic health conditions.

“This bill proposes multiple changes to multiple consumer protections that have been in place for 20 or 25 years,” Ditre said.

Along with other critics, Ditre said the bill poses potential conflicts with the national health reform law and will prove disruptive to consumers, insurers and policymakers as the national provisions take effect.

“People need to know this is happening,” Ditre said. “The general public, as well as most people in the Legislature, are completely unaware this is going on.”

For Trish Riley, who directed the now-vacated Governor’s Office of Health Policy and Finance established by Baldacci, the proposals included in LD 1333 demand much closer scrutiny and an effort to establish a degree of bipartisan support.

The need for an analysis is compounded by the connectedness of the bill’s several provisions, she said Saturday.

As the principal architect of the politically divisive Dirigo Health Reform Act of 2003, Riley said state officials, lawmakers, lobbyists and others spent many weeks in debate and compromise. The Dirigo process began with the formation of the fractious and diverse “health action team” that represented the conflicting viewpoints of many stakeholder groups and ended with the unanimous endorsement of a special bipartisan committee of the Legislature and a two-thirds majority vote in each house, Riley said.

With the “ought to pass” endorsement of the insurance committee, LD 1333 now will move to the full Legislature for debate and voting.

CORRECTION:

An early version of this story should have stated that a draft of Rep. Wesley Richardson’s amendment to LD 1333, which entirely replaced the original bill, was distributed to committee members at the beginning of the public hearing on Wednesday, April 27.

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