AUGUSTA, Maine — Older Mainers living in rural areas will pay more for health insurance under a controversial bill passed last spring, while many others will see lower rates, according to a new independent report.
Most people who buy their own health insurance, particularly the young living in urban areas, will pay less for premiums as a result of the law, known as PL 90, but about 20 percent who are older and reside in areas such as Down East and northern Maine will pay more, according to a report by Gorman Actuarial of Massachusetts, a consulting firm commissioned by the state to review the law’s impacts.
The bill overhauled the health insurance market for about 40,000 people who buy coverage through the individual market or through employers with fewer than 50 workers, known as the small group market.
“Gorman Actuarial found that thousands of older Mainers and small businesses in rural Maine must now pay more for health insurance under the new law,” Garrett Martin, executive director of the left-leaning Maine Center for Economic Policy, said in a press release. “It validates MECEP’s analysis last spring which warned that while some individuals and businesses would realize lower rates, others would see their costs increase. PL 90 is a flawed law that the governor and the Legislature must act to fix.”
The law allows insurers from other New England states to sell insurance in Maine and gives them more leeway in setting rates based on age, geography and tobacco use. It also creates a high-risk pool for Maine’s sickest residents funded partially by a fee charged to nearly all private policyholders in the state.
Joel Allumbaugh, health care policy director for the conservative Maine Heritage Policy Center, called the report “largely positive.”
“The Gorman report illustrates that 84 percent of small business members benefit from PL 90 in the first year [and] 93.6 percent benefit in the second year,” he wrote in an email.
Allumbaugh also pointed out that the report predicts growth in the small group market.
“This market has been in a death spiral and PL 90 begins to reverse that trend,” he wrote.
The report includes a number of assumptions because lawmakers haven’t fully ironed out the law’s implementation.
The bill, then known as LD 1333, generated heated debate last year after Democrats accused Republicans of rushing the bill through the legislative process. Supporters argued that increased competition and other changes would lead to lower rates, especially for younger people, while opponents said the law would raise costs for older Mainers living in rural areas.
According to the Gorman report, presented Tuesday to the Legislature’s Insurance and Financial Services Committee, rates for individuals could drop 12 to 15 percent, spurring overall growth of that market. As insurers are reimbursed for high-risk individuals using subsidies from the rest of the market, premiums will drop, the report states.
Most of the future growth, however, will result from the federal Affordable Care Act, which mandates coverage for individuals, according to the report.
In the small group market, which includes many small businesses that provide health insurance for their employees, the majority will see little change in premiums. But 7 percent of small group members, generally older populations in rural areas, will see their rates go up an average of 20 percent higher than they would have without the law, the report found. Another 9 percent will see significantly lower premiums.