AUGUSTA – Maine Democrats’ major campaign promise last year was the repeal of Republican-backed health care insurance reform known as Public Law 90 (PL90), but now that they control the Maine House and Senate they face a problem: PL90 is working.
The Insurance and Financial Services Committee on Tuesday worked on six proposals to modify health insurance regulations in the state of Maine. Lawmakers ultimately decided to toss out three of the bills, but they have not abandoned their pursuit of repealing PL90 and are even considering measures that would go far beyond the federal Affordable Care Act, also known as Obamacare.
The Democrats current proposal is three-fold. First, they would like to end – or severely modify – health insurers’ practice of determining rate variance based on factors such as geography, age, and tobacco use. Second, they would like to restore and expand public hearings for insurance rate increases. Lastly, they want to stack the board of the Maine Guaranteed Access Reinsurance Association with left-leaning consumer advocates.
Geographic and age-based rating is commonly used in the car insurance market. It simply allows insurers to offer lower rates to individuals who are less expensive to insure.
Yet Democrats are sympathetic with leftist advocacy groups who argue that it is unfair to make people who are old or who live in rural areas pay higher rates.
L.D. 161, An Act To Protect Health Insurance Ratepayers from Undocumented Rate Increases, introduced by Rep. Louis Luchini (D-Ellsworth), would prohibit health insurers from establishing rates on the basis of geographic area. Under Obamacare and Maine law, geography, age, and tobacco use are permissible rating factors.
The bill would also merge rating bands for age and geographic area so that the combined rate differential due to age and geographic area may not exceed a ratio of three to one – a higher ratio then provided for in Obamacare.
The second prong of the Democrats’ health insurance reform idea is to rollback changes PL90 made to the rate review process. L.D. 225, An Act To Restore Consumer Rate Review for Health Insurance Plans in the Individual and Small Group Markets, introduced by Rep. Nathan L. Libby (D-Lewiston), would restore the pre-PL90 process for advanced review and prior approval in the individual market.
Before PL90, insurers in the individual market that wanted to increase rates were compelled to endure protracted public hearings.
Outside advocacy groups like Consumers for Affordable Health Care (CAHC) and Maine People’s Alliance (MPA) used these hearings as public flogging sessions. In the case of CAHC, outside advocates have even received taxpayer payouts for intervening in these hearings.
Democrats argue that CAHC and MPA are “consumer” groups out to make Maine’s laws more “consumer friendly,” but both groups openly acknowledge their explicit commitment to bringing about single-payer, government-run health care. Republican critics of these groups believe CAHC and MPA are pursuing a strategy of “death by 1,000 lashes” in an effort to undermine private health insurance markets.
PL90 eliminated the requirement to hold public hearings for every rate increase thus removing MPA and CAHC from the rate review process. Instead, companies can submit a rate change under “file and use” conditions, meaning rates can respond quicker to shifting demographic and market conditions. The streamlined process has resulted in lower rate increases and a growing percentage of rate decreases.
Libby’s bill (L.D. 225) goes beyond pre-PL90 regulations by extending advanced review and prior approval to the small group market. The small group market has historically operated under file and use. His bill would also mandate that Maine’s Superintendent of Insurance hold hearings in at least three separate locations.
While Democrats seem to operate under the assumption that insurance companies only increase rates out of avarice, Sen. Rodney L. Whittemore urged his colleagues to keep in mind that the present debate is occurring within the context of rising health care costs.
“The whole intent of the new law was to make the process more efficient and to provide for timelier premium increases in response to the rising cost of health care,” said Whittemore.
“That is why an insurance company increases rates – the rising cost of health care,” he said.
Rep. Sharon Treat (D-Hallowell) is Co-chair of the Insurance and Financial Services Committee. She is also the Democratic ringleader on health insurance reform. One of her bills, L.D. 681, An Act to Improve Oversight of Insurance Rates and Ensure Consistency with Federal Law, would accomplish the same rating band and rate review changes as L.D. 161 and L.D. 225 with a few minor differences.
Although Democrats argue that these hearings increased transparency and protect consumers, there is little evidence to suggest that such hearings accomplish anything useful for insurers or the insured.
Critics of PL90 also choose to ignore the fact that the federal government has twice sent letters to the Maine Bureau of Insurance applauding the rate review process PL90 established.
Rep. Joyce A. Fitzpatrick (R-Houlton) questioned the usefulness and cost of public rate review hearings. “What have been the results of past hearings? The comments are probably all in the range of ‘I don’t want my rates to go up,’” she said. “But are they presenting facts that would keep the rates lower?”
Rep. Raymond A. Wallace (R-Dexter) said sweeping changes brought about by Obamacare could very well render the Committee’s discussion pointless. “Until we know what the ACA is going to do, I don’t see how we can make any decisions about this,” said Wallace.
“They’re going to make up a bunch of rules and then we’ll have to throw this all out,” he said. “We’re doing work for nothing. Seriously. It’s great. We’re going to put a bill out. But what good is it?”
The Committee will reconvene on Thursday to discuss these and other proposals including bills related to the Maine Guaranteed Access Reinsurance Association established under PL90. The most likely result of the deliberations will be an omnibus bill containing Democratic reforms which the Governor is not likely to support.