Maine House approves insurance changes

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AUGUSTA — Even as Democrats and Republicans continued to snipe at each other, the Maine House of Representatives on Tuesday gave final approval to a Republican bill that makes sweeping changes to health insurance in Maine. The bill next will move to the Senate, where it is scheduled for a vote Wednesday.

The 79-68 vote in the House broke largely along party lines. Rep. Stephen Hanley of Gardiner was the only Democrat to vote in favor of it. The House’s only Independent member, Rep. Benjamin Chipman of Portland, voted against it.

The bill, LD 1333, has been controversial, both for its content and the speed with which it is passing through the Legislature. Democrats have complained that the original bill and its amendments — 45 pages in all — were ramrodded through and no one has had time to fully understand what the proposal could mean for Mainers.

“The best work we do, we do together,” Rep. Emily Cain, D-Orono, told House members during floor debate on the bill. “And by that standard, LD 1333 is not our best work. We have shown that we can work together at the committee level when given the time and space to do so. Two supplemental budgets, regulatory reform, even vernal pools … so, why not this — on a bill that dramatically changes the insurance markets in Maine?”

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Republicans have defended the swift work on the bill, saying similar proposals have been batted around for years and there has been plenty of time since its introduction two weeks ago for lawmakers to familiarize themselves with the details of the bill. They argue that insurance reform is needed now.

“This bill seeks to set free a suffering youth that we have chained to our bad health decisions,” said Rep. Lance Harvell, R-Farmington, during the floor debate. “The youth of this country should not be made responsible for our bad decisions, but the current format means that they are. This bill seeks to change it.”

The bill makes many alterations to the state’s insurances rules and regulations, including:

* Allowing out-of-state insurance companies to sell insurance here, as long as those companies are based in New England, beginning in 2014.

* Allowing insurance companies to more greatly vary their rates based on a person’s age and where the customer lives, beginning in 2012.

* Allowing insurance companies to offer financial incentives — such as no co-payment or a reduced deductible — to Mainers who use a hospital that the insurance company has deemed to be higher quality and lower cost than others.

* Establishing a reinsurance association that reimburses insurance companies for some of the costs associated with the health care claims of high-risk Mainers. That money would come from an assessment on insurance companies. 

* Eliminating the Advisory Council on Health Systems Development, a 20-member group that administers the state health plan and reports on health insurance issues that affect Maine.  

The changes that have gotten the most attention are the authorization of out-of-state insurance companies and the OK for companies to more greatly vary their rates based on a person’s age and region.

Proponents say the out-of-state change would enable Mainers to buy insurance at lower rates because companies outside Maine tend to have more competition, a larger pool of customers and a greater number of insurance products from which Mainers could choose.  

Opponents say out-of-state companies wouldn’t have to adhere to Maine’s consumer protection regulations and the state wouldn’t be able to do a lot if a customer had a problem with an insurer outside Maine. 

For the rate changes based on age and region, proponents say it would lower insurance costs for younger people, encouraging more to become insured. And the addition of typically healthy young people would strengthen the insurance pool for all.  

“Because the rates on the lower end for younger and healthier people are so high in Maine, it discourages their participation in the market,” said Lance Dutson, communications director for House Speaker Bob Nutting. R-Oakland. “Maine’s got something like 133,000 people that are uninsured right now, and a significant amount of those people are in those younger age brackets. So what we have is a group of older, less-healthy people making up the pool, which increases the risk for insurance companies and drives the cost up. So it’s kind of like a death spiral.”

Opponents say the changes may lower rates for young people, but only at the expense of middle-aged and older Mainers, who could be charged up to five times more under the bill. They also say the regional rate changes would pit northern and southern Maine against each other, particularly if businesses consider insurance rates when choosing where to locate.

A chart by the Maine Center for Economic Policy, a progressive advocacy group, shows insurance rates for small businesses could go down 4 percent in far southern Maine, while they could go up 17 percent in far northern Maine. MECEP believes the difference could be greater in reality. It based its figures on a preliminary analysis done by the Maine Bureau of Insurance and Massachusetts-based Gorman Actuarial. MECEP believes that preliminary analysis isn’t informative enough.

“With any proposal, in most instances, there are going to be winners and losers,” Garrett Martin, associate director of MECEP, said. “The problem with this particular proposal is because it’s so far-reaching and because it rolls back so much, there has not been sufficient time, quite frankly, for the Bureau of Insurance to do the necessary analysis to really help us appreciate the degree to which folks are going to be impacted by these proposals.”  

House Republicans didn’t like the Bureau of Insurance’s recent preliminary analysis either, but for a different reason. The report showed a number of places where LD 1333 — even after recent amendments — would make Maine noncompliant with the federal Affordable Care Act, which overhauls insurance rules and regulations on a national scale. If Maine doesn’t comply with the law, it could be penalized by the federal government. Maine’s possible noncompliance is another reason opponents dislike the bill.  

At the House speaker’s request, Maine Attorney General William Schneider took a look at LD 1333. In a letter to the speaker Monday, he appeared to disagree with the Bureau of Insurance, saying Maine would be compliant if the bill passed.

A spokesman for the Maine Bureau of Insurance said the bureau had taken no position on the bill and had reviewed LD 1333 for technical issues only.

Calls to the Attorney General’s Office were not returned Tuesday afternoon.

ltice@sunjournal.com

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