Health insurance law debate heats up with GOP praise, Democratic bills to change it

Posted Jan. 25, 2013, at 5:57 p.m.

AUGUSTA, Maine — Lawmakers traded barbs Friday on a 2011 health insurance reform law that Republicans praise for leading to lower premiums in the individual and small-group markets, but Democrats deride for allowing insurers to raise rates without scrutiny.

Democrats made the health insurance reform law a central theme during the 2012 campaign season that ended with them recapturing legislative majorities in both the House and Senate. Now that lawmakers are back at the State House, Democrats already have introduced two bills that target key elements of the law.

Meanwhile, Republicans this week celebrated a new analysis from the state Bureau of Insurance that shows a growing percentage of customers renewing their small-group policies have seen premiums drop since the health insurance reform law passed.

“Some of my Democratic colleagues have said they want to change the law, but in light of the numbers we’re beginning to see as the reform takes effect, we need to be careful about altering this new reform before its potential benefits have been realized,” Rep. Joyce Fitzpatrick of Houlton, the ranking Republican on the Legislature’s Insurance and Financial Services Committee, said in a statement.

The insurance overhaul bill — called Public Law, or PL, 90 — was an attempt to spur more competition in Maine’s health insurance market by making it easier for insurers to offer new plans for small groups and individuals, and by allowing small businesses to band together and negotiate more favorable rates.

The bill also created a high-risk pool — or reinsurance program — to protect insurance companies from the high costs of covering patients who require the most medical care. The law funds the program in part through a $4 assessment on the monthly premium of anyone with private insurance.

In addition, the law allows insurers to charge different rates based on patients’ age, geography and health status. Proponents say that part of the bill is an attempt to woo more young, healthy patients into the marketplace by allowing insurers to charge them less.

Eventually, the law will allow insurers to market plans certified in other states to Maine consumers.

Democrats have said the law does away with important consumer protections and has disproportionately caused premium increases among small businesses in rural areas.

One provision targeted by the two Democratic bills allows insurance companies to raise rates in the small-group market — which includes small employers with 50 or fewer employees — by 10 percent or less without approval from the state’s Bureau of Insurance. Before the law passed, the Bureau of Insurance had to sign off on all rate increases for small group and individual policies.

Rep. Adam Goode of Bangor and Sen. John Patrick of Rumford, both Democrats, have proposed separate bills that restore that rate-review provision. Goode’s bill also requires that the administrative body that oversees the high-risk pool conduct its proceedings in public.

“We shouldn’t give insurance companies the freedom to raise premiums without publicly justifying why those increases are necessary,” Goode said in a prepared statement. “This bill will ensure that the superintendent uses available tools to bring transparency and accountability to the process and stop any unnecessary rate hikes.”

Insurance Superintendent Eric Cioppa on Thursday presented the new analysis on premium changes in the small-group insurance market to the Legislature’s Insurance and Financial Services Committee.

Some 17.5 percent of small groups renewing their policies in the last quarter of 2012 saw their premiums decrease, the data showed, compared to 2.9 percent that saw lower premiums two years earlier, before the insurance reform took effect. The number of small groups renewing their policies dropped by 13.4 percent during the two-year period.

The data also showed a 40 percent increase between 2011 and 2012 in the number of individual policies sold by insurers.

A similar analysis prepared by the Bureau of Insurance in September 2012 showed that the small groups seeing their premiums increase more than 40 percent were more likely to be in northern and eastern Maine than in southern Maine regions.

But the analysis presented Thursday showed those geographic differences starting to subside.

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