AUGUSTA, Maine — Democrats in the Maine Legislature took steps Monday toward rolling back portions of a 2011 Republican-backed health insurance overhaul law. Democrats made the law a central theme last year in their campaign to recapture control of the Legislature.
The House and Senate voted largely along party lines to repeal a portion of the law that allows insurers who sell individual and small-group policies to charge different premiums based on where in the state their customers live. And lawmakers in both chambers voted to repeal a provision that allows insurance companies to raise rates in the individual market by 10 percent or less without approval from the state’s Bureau of Insurance.
Democrats said they were acting to fulfill the requests of constituents who have complained to them about steep rate increases since the insurance law, known as Public Law 90, took effect in 2011. Republicans urged their colleagues to let stand a law that they say is showing results.
Republican Gov. Paul LePage has been a supporter of the insurance reform law and is unlikely to support major changes.
“PL 90 has severely injured Aroostook County. This bill will end the practice of unfairly hiking my constituents’ insurance rates,” Rep. Robert Saucier, D-Presque Isle, said of LD 191, which would prohibit insurers from varying premiums based on geography while still allowing them to differentiate based on age, health status and whether policyholders smoke.
The 2011 health insurance law was an attempt to spur more competition in Maine’s individual and small-group health insurance market by making it easier for insurers to offer new plans 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, place of residence and health status. Proponents have said that part of the bill is an attempt to woo more young, healthy patients into the marketplace by allowing insurers to charge them less.
Critics said those provisions have left older customers and small businesses in the state’s rural counties with insurance plans that charge higher premiums and deductibles. Democrats have also said the law does away with important consumer protections.
“This is simply a little tweak that we’re trying to do to make a quick fix,” said Rep. Louis Luchini, D-Ellsworth, who sponsored LD 191. “Any time you pass a large law like PL 90, you’re going to have some unintended consequences. I don’t think anybody intended to hit rural businesses hard.”
But Rep. Joyce Fitzpatrick, R-Houlton, cautioned against making a major change to a new law. “PL 90 has had just barely a year’s worth of renewals,” she said. “There were some disruptions. To change it back now at this point when things have leveled out would merely shift the burden back to the counties that saw decreases.”
Republicans have pointed to statistics from the state Bureau of Insurance that show growth in the number of individual policies sold in the state since the new insurance law took effect as evidence the law is working. At the end of 2012, those statistics also showed that more small businesses renewing their policies saw their premiums drop or increase by smaller amounts than they had two years earlier, before PL 90 took effect. The benefits initially were more heavily weighted toward the state’s urban centers, though some of those differences have started to subside.
The statistics also showed fewer small businesses — which have 50 or fewer employees — renewing their coverage policies.
Democrats in the House and Senate also backed a bill, LD 225, that would reinstate a requirement that the Bureau of Insurance review and approve all rate increases in the individual insurance market. Under PL 90, no rate increases smaller than 10 percent require Bureau of Insurance approval, and consumers can only request a hearing on the rate increase if it exceeds 10 percent.
“These health insurers could ask for and be granted 9.9 percent increases year after year under the radar,” said Rep. Nathan Libby, D-Lewiston, who sponsored LD 225. “We have tools at our disposal to help mitigate the runaway costs of health insurance in this state.”
But Republicans argued Maine’s insurance laws, coupled with the federal Affordable Care Act, offer consumers sufficient recourse to object to excessive rate increases. Chief among them, they said, is a federal requirement that insurers spend 80 percent of premiums on medical care. If they fall short of the requirement, they must refund policyholders the difference.
“The fact that rates do not require prior approval does not mean they are not subject to scrutiny,” Fitzpatrick said.
The insurance law changes passed Monday aren’t the first the Legislature has passed this spring. Lawmakers unanimously signed off on a measure earlier this month that temporarily suspends PL 90’s high-risk pool — and the $4 assessment on policyholders — while a similar, temporary federal program is in operation. The federal program charges a $5.25 monthly assessment for the two years it’s in operation.
That measure also includes some changes to the high-risk pool that Democrats sought, including a requirement that the nonprofit organization that runs it, the Maine Guaranteed Reinsurance Association, have a consumer representative and publicly post its meeting schedule and minutes.