Maine Democrats Assail MGARA Amid Obamacare Chaos


AUGUSTA – As President Barack Obama’s sweeping health care overhaul causes regulatory chaos across the nation, Maine Democrats and other advocates of government-run health care are keeping true to the Party mantra – never let a crisis go to waste.

During public hearings and work sessions last week, lawmakers on the Insurance and Financial Services Committee discussed several bills related to the President’s Affordable Care Act (ACA), more commonly referred to as Obamacare.

The Democrat-backed proposals, which have the support of Maine’s left-leaning interest groups, are varied, but each seeks to extend government control over health insurance while repealing the 125th Legislature’s private sector-oriented reform law known as Public Law 90 (PL90). (Recommended: Maine Democrats craft health insurance rollback…)

The debate over one bill in particular, L.D. 546, provides a case study on how the federal government is encroaching on states’ sovereignty, undermining good state-level policy, and providing cover for the advance of single-payor, government-run health insurance.

In a public hearing on Wednesday, Committee Co-chair Rep. Sharon A. Treat (D-Hallowell) defended a proposal (L.D. 546) to suspend and modify the Maine Guaranteed Access Reinsurance Association (MGARA) in order to make way for a similar – but more expensive, national transitional reinsurance program.

MGARA is a private reinsurance company – an insurance company for insurance companies – intended to help insurers cover the cost of insuring high-risk individuals with pre-existing conditions. MGARA was created by Republicans as part of PL90 and is funded by a monthly assessment of four dollars per insured individual on the entire health insurance market.

The national program, which Health Secretary Kathleen Sebelius created by fiat through her rule-making authority, is more expensive than MGARA and will result in Mainers paying for other states’ reinsurance costs. The federal government has denied Maine’s request to opt out of the national program.

In a Jan. 13 letter to the Department of Health and Human Services, Maine Bureau of Insurance Superintendent Eric A. Cioppa asked the federal government to allow Maine to opt out of the national program. While other states’ needs may be better met by a national program, wrote Cioppa, this is not necessarily true for Maine.

“Insurers in Maine are already used to working with the existing programs, and significant resources have already been expended on building up the infrastructure to operate the Maine-based program, along with the know-how that comes from hands-on operational experience,” wrote Cioppa.

In Maine, he wrote, “the ability to establish and operate an effective program has already been accomplished, and the concerns of efficiency, economy, and resource allocation weigh in the opposite direction than they do in states where HHS or the organizers of a state-based startup would be working to establish a program.”

“[MGARA] is already carrying out precisely what Section 1341 [of Obamacare’s rules] mandates – stabilizing premiums in a guaranteed-issue, community-rated individual health insurance market by reinsuring the claims costs for high-risk individuals, financed by per capita contributions from the entire health coverage market,” he wrote.

In a Feb. 7 letter of reply, Sharon B. Arnold, a federal bureaucrat at HHS, denied Maine’s request to opt out of the federal program, stating that HHS “has no authority to grant to a State a waiver or exemption from the transitional Reinsurance Program requirements in Section 1341 or any other provision of the ACA.”

Republicans and Democrats agree that MGARA must be temporarily suspended in order to avoid double-billing as a result of the federal government’s unwillingness to let Maine cover high-risk individuals via MGARA rather than through the federal program.

Sen. Rodney L. Whittemore (R-Somerset) has introduced legislation (L.D. 1167) similar to Treat’s that would suspend MGARA’s operations until the federal transitional program expires on December 31, 2016.

“The federal government has decided to operate their own national reinsurance association,” said Whittemore. “This bill makes changes to the laws governing MGARA so that Maine health insurance policy holders are not double billed for reinsurance.”

While there is bipartisan consensus that MGARA must be temporarily suspended, Treat’s bill goes far beyond Whittemore’s proposal and would drastically alter MGARA once it resumes operation.

In addition to temporarily suspending the association’s activities, Treat wants to extend Freedom of Access Act (FOAA) laws to MGARA and modify its board of directors to include two “consumer” representatives.

Although Treat told The MAINE WIRE on Wednesday that she does not have any particular consumer representatives in mind, Republicans believe she wants leftist groups like Consumers for Affordable Health Care (CAHC) and Maine People’s Alliance (MPA) on the board of MGARA. Both CAHC and MPA are openly committed to bringing about single-payor, government-run health care, so it is unclear what value they would provide to a private insurance company.

“Just weeks ago, Rep. Treat and Democrats rejected the nomination of former Rep. Jon McKane to the board of Dirigo Health in part because he was critical of that organization in the past,” House Republicans stated in a press release. (Related: Democrats accuse Dirigo Health board nominee of wanting higher costing, poorer quality health care…)

“Now they are carving out a place in statute for liberal activist groups Maine People’s Alliance and Consumers for Affordable Health Care on the board of a private reinsurance pool, even though those groups oppose it and oppose PL 90, the reform law that created it,” said Republicans. “This is not only hypocritical, it flies in the face of good, cost-controlling policy.”

McKane, a former Republican lawmaker from New Castle, was nominated by Gov. Paul R. LePage to chair the board of the Dirigo Health Association (DHA) as the program expires later this year.

During his nomination hearing and in press releases thereafter, Treat stated repeatedly that McKane was unfit to sit on the board of the DHA because he was critical of the program and “hostile” to its goals.

But when it comes to the board of MGARA it appears she is now supporting the presence of critical members on administrative boards.(Related: Former GOP lawmaker blasts Democrats, leftist groups during nomination hearing…)

Dan Bernier, a Waterville-based attorney who represents Maine’s insurance agents, testified against both the changes Treat is proposing. He said MGARA has exceeded all of its expectations – both in terms of lowering rates and keeping costs contained.

“The MGARA board has performed perfectly,” he said. “It should be suspended but it should not be changed.”

He said applying FOAA to a private association like MGARA was “unprecedented” and “dangerous.”

“MGARA is a private reinsurance company,” said Bernier. “That is not the opinion of a select few. That is the opinion of the Maine Attorney General’s office.”

“Opening up insurance businesses to FOAA is a very scary road to go down,” he said. “Once you open this door, there is a whole bunch of organizations that could be open to FOAA.”

“There’s no doubt in my mind that after three years in the federal pool we’ll be begging for MGARA,” said Bernier.

By S.E. Robinson

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