Democrats warn health insurance overhaul could drive up costs as legislators prepare for debate

Posted May 09, 2011, at 6:01 p.m.
Last modified May 10, 2011, at 9:45 a.m.

AUGUSTA, Maine — Democratic lawmakers repeated calls Monday for a more bipartisan approach to overhauling Maine’s health insurance market, warning that a Republican measure could drive up costs for older Mainers as well as residents and businesses in rural areas.

Republicans, meanwhile, showed no signs of backing off their plan to seek House and potentially Senate approval on Tuesday for a sweeping bill they insist lowers costs by increasing competition and providing Mainers more flexibility in purchasing insurance.

Lawmakers are gearing up for a contentious debate and, in all likelihood, party-line votes on Tuesday on an insurance overhaul bill that has produced the legislative session’s first major partisan fracture — among lawmakers, at least.

On Monday, a Bethel physician and a representative of nearly 1,500 small businesses in Maine added their voices to Democrats’ warnings that the GOP-led Legislature was rushing major policy changes without analyzing potential ramifications.

“Everyone knows that when people lose coverage, they seek less care. And when they seek less care, they become sicker,” said Dr. Richard DeCarolis, a primary care physician from Bethel.

The controversial bill, LD 1333, contains a number of significant policy shifts, including:

  1. Allowing Maine residents and businesses to purchase insurance offered in other states, even when those packages do not meet Maine mandates.
  2. Creating a high-risk insurance pool funded by a $4-a-month fee on all policyholders in the state.
  3. Allowing small businesses to band together to purchase insurance at cheaper rates.
  4. Eliminating a rule limiting how far insurance companies can force policyholders to travel for medical care.

Republicans contend that the changes — many of which have been discussed for years — will lower health care costs for younger, healthier individuals. And when more young, healthy people purchase insurance, they help reduce costs across the board because they essentially subsidize care for others.

“By widening the insurance pool and reducing risk, the companies that power Maine’s economy can drive down their health insurance costs and make room to expand and hire more Maine people,” Gov. Paul LePage, an ardent supporter, said in his weekend radio address.

But Democrats are fuming that the omnibus bill was debated for less than a hour in committee and then given initial approval in the House by a party-line vote with minimal explanation by the Republican backers. Democrats say GOP leaders were so hurried to get something done that they haven’t allowed the Maine Bureau of Insurance to perform the actuarial calculations that will tell lawmakers the true benefits or costs of the bill.

Absent new calculations, Democrats said they were forced to use a 2007 study by the Bureau of Insurance that shows insurance rates rising dramatically in rural Maine because of changes that allowed companies to weigh age and geography more heavily in setting rates.

The liberal-leaning Maine Center for Economic Policy noted that the 2007 study forecast that individual rates would increase 19 percent in Aroostook County and 22 percent Down East while insurance rates paid by businesses in those areas would increase 17 percent and 9 percent, respectively.

“Lawmakers should be working to help us increase our purchasing power, not undermining our bottom lines,” said Nate Libby, director of the Maine Small Business Coalition, who added that nearly 1,500 businesses had expressed concern about the proposed changes as of Monday.

But Republicans say that Democrats are using an old study that does not reflect the scope of the changes in LD 1333 and appears to overstate price difference based on age and geography. Additionally, they point out that the bill contains price protections to prevent insurance companies from significantly increasing premiums for those in the high-risk pool.

“It’s illegal, according to this bill, to charge somebody more for a policy if they are part of this pool,” said Lance Dutson, spokesman for the House Republicans.

Asked why not wait for the Bureau of Insurance to complete actuarial studies of the proposal, Dutson said components of the bill have been examined in Maine before and other components are in place in other states, so they understand the impacts. And by delaying a vote now, the Legislature runs the risk of ending the session next month without insurance reform.

“We’ve got a solid product,” he said. “To delay this longer and put it off until 2014, as the Democrats want, that is not what Maine people want us to do,” Dutson said.

Rep. Henry Beck, D-Waterville, described the GOP plan as a “bad deal” for anyone over age 48 and living in rural Maine.

“We are open to compromise,” said Beck, a member of the Insurance and Financial Services Committee. “Send it back to committee and we will get a better bill.”

The House is expected to vote again on LD 1333 during Tuesday’s floor session. Senate leaders could then decide to take up the bill the same day.

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