Claims of state insurance rate decreases in Maine prompts rebuttal

LEWISTON — Claims that a recently enacted health insurance law change was creating lower premium rates drew sharp rebukes from consumer advocate groups who said the new law is driving rates skyward.

The Maine Wire, an online publication of the Maine Heritage Policy Center, a conservative think tank, reported this week that individual health-insurance rates were set to drop by 60 percent as a result of a 2011 state law change that supporters say is making Maine's markets more competitive.

Opponents said it was clear to them that the only benefactors of the new law are the health-insurance companies. 

Joe Ditre, a lawyer and executive director of the Augusta-based nonprofit, Consumers for Affordable Health Care, said the Heritage Policy Center's report compared rates from two health-insurance policies and from only one insurance provider, Anthem.

"Anthem did offer a new product with lower premiums," Ditre said. "But the premiums are lower because the product has much higher deductibles, higher coinsurance and less coverage — lots less coverage."

One difference between the two plans for young women was that one covered the cost of childbirth; the other did not. One plan covered prescription drugs; the other provided only partial coverage.

"I could sell you a car and it will be really cheap," Ditre said. "Now, it won't have a motor or tires, but it will be really cheap. It will be 60 percent cheaper than what you would have paid for a car with a motor and tires."

Joel Allumbaugh, president of the Maine Association of Health Underwriters, who works on contract for the Heritage Policy Center, said Anthem was selected because it held the largest portion of the market for individuals in Maine. 

Allumbaugh agreed that Anthem no longer offered one of the plans that was used for MHPC's comparison. If a consumer had that plan they could keep it, but the new — similarly named — plan with fewer benefits and higher deductibles is 60 percent cheaper (54 percent cheaper for those under 18, and 52 percent cheaper for 19- to 24-year-olds), based on rates Anthem was proposing to the Bureau of Insurance.

Allumbaugh told the Maine Wire, "Since the law went into effect this past October, we have primarily seen the law's impact to Maine's small group insurance market with the vast majority seeing lower premiums."

Ditre said that's just not so. He faulted the Heritage Policy Center with presenting the data in a lopsided format. Suggesting all individual plans would be dropping by 60 percent was misleading, he said.

"The overwhelming majority of people in the state of Maine are seeing their rates go up," he said. "It's a broken promise. It's spin by a corporate-funded spin tank to basically put a diamond in a pig's ear. It's that bad."

"To claim that rates are going down by 60 percent is just not true."

While some small group plans saw decreases, others saw massive increases, according to a release issued Wednesday by the Maine People's Alliance, a left-leaning advocacy group.

Increases were particularly prevalent for small group plans in rural parts of Maine insuring older workers, said Mike Tipping, communications director for the alliance.

Lisa Burton, co-owner of Reel Pizza Cinerama in Bar Harbor, has seen health insurance premiums for her business and its employees increase by more than 95 percent, according to a release issued by Tipping.  

Burton's business employs the equivalent of 12 full-time workers. 

"I'm frustrated," Burton said. "It's a hard thing to swallow, the nearly doubling of your rate.

"We're good at keeping other costs down, but I have no control over this. We're trying to do the right thing by offering coverage for our employees, but it can really put you under."

New fee

The law change includes a new fee for everybody in a group insurance plan in Maine, Allumbaugh said. Supporters of the measure call it an "assessment." All group policy holders in Maine will see rates increase by about $4 a month.

The money will create a pool of $20 million to $25 million a year that insurance companies can tap into to pay costs on high-demand customers using individual plans to keep rates down.

The policy targets younger people, who in general use less health insurance. The theory is that, by bringing more people into the market who use fewer services, rates can be diluted for others. 

Allumbaugh said that's known as a reinsurance pool.

Prior to the law change, about 35,000 people in Maine bought individual health-insurance policies. "Their premiums basically support whatever claims are paid for that population," Allumbaugh said. "And, well, it's not a super-healthy population. So the rates have been going up dramatically for a long time and, as the rates go up, the healthiest tend to drop coverage first."

He added, "What the reinsurance pool basically did was create a subsidy from everyone else with insurance in the state with group coverage." That includes about 500,000 people.

The extra revenue allows insurance companies to keep rates lower in an attempt to draw more people into the market, Allumbaugh said.

Ditre agreed that some distinct markets in Maine, largely in the southern part of the state, which has more young workers in small group plans, would see some rate decreases. About 12 percent to 15 percent of the small group market was seeing decreases, Ditre said, but most other plans would see rate increases.

"The promise of Chapter 90 was that currently uninsured young and healthy people would flood into the market to buy health insurance at these new, lower rates," Ditre said.

But, based on data with the Bureau of Insurance, that pool is not growing, Ditre said. It's primarily a function that younger people, even with the lower rates, cannot afford to purchase plans.

"There are filings with the Bureau of Insurance which are gauging how many uninsured people are coming into the market, and it's virtually none," Ditre said.

sthistle@sunjournal.com

Health Choice and Health Choice Plus Benefit Comparison (Anthem Feedback 05-09-12)

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Comments

 's picture

Ditre

In the spirit of full disclosure, Ditre's organization is certainly "left-leaning" to say the least. Want to label? Let's label throughout the article, shall we? I am so sick of liberal bias in the media.

Jason Theriault's picture

I don't think so.

You know what I'm sick of? People dismissing the news they don't agree with as "biased".

Where in this story is the bias? Is it when they pointed out the the MHPC compared apples to oranges?
Or was it when they brought in the guy works for the Maine Association of Health Underwriters to respond and give equal time?

Gerald Weinand's picture

Allumbaugh

Allumbaugh is also on the Board of Directors of the Maine Guaranteed Access Reinsurance Association (MGARA), the State-run high-risk insurance pool.

PL90 allows private insurance companies to force high-risk (and high cost) customers off their coverage and onto MGARA. PL90 also allows MGARA to charge a $4 a month tax on every person covered by private insurance to help fund the high-risk pool.

Removal of these high cost customers will allow private insurers to lower their costs, but also to increase their profits.

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