As Maine’s successful reforms to its health insurance market in 2011 continue to fuel the national conversation about ObamaCare repeal and replacement, progressives are desperate to paint those reforms as dismal failures. In a blog post last Friday, Mike Tipping characterized PL 90–the landmark healthcare reform law passed in 2011–as a “failed Republican experiment.
Unfortunately for Tipping, the facts tell a different story. To understand PL 90’s impact, it’s important to consider the historical context. In 1993, legislators passed several health insurance regulations that weakened free market forces and increased health insurance prices for most Mainers. Two policy changes in particular contributed to rising costs. The first was “guaranteed issue,” which required insurance companies selling individual health insurance plans to issue all plans to all individuals applying for coverage, regardless of health status.
The second harmful reform was a requirement that premiums in the individual and small-group markets vary by only 1.5:1 for age and geographic disparities combined. This means that an individual couldn’t be charged more than 1.5 times the lowest rate charged to another person for the same insurance.
These restrictions ignored the fact that naturally occurring age-related variation in health care utilization is roughly 5:1 – in other words, on average, elderly people require five times more medical care than young, healthy individuals. This forced carriers to reduce rates for older individuals while significantly increasing rates for young adults.
The 1993 reforms had devastating consequences. Insurers and young people fled the market, and premiums more than doubled between 1995 and 2001 as a death spiral began. The number of individuals covered dropped to just 36,000 by 2011 — a 65 percent decline from the 102,000 individuals enrolled in 1993.
Finally, in 2011 lawmakers passed Public Law (PL) 90, which rolled back many of the restrictive and damaging policies that were hindering Maine’s health care system. The legislation loosened community rating regulations, allowing the free market to determine premium rates more fairly. It also guaranteed access to reinsurance funding to high-risk individuals, loosened regulations regarding the purchase of insurance across state lines, and made it easier and more affordable for the long-term unemployed to buy health insurance. Following PL 90’s enactment, average annual premium rate increases in the individual and small group markets slowed, while many enrollees began enjoying lower prices than before.
Let’s look at some of Tipping’s specific claims, and see how they measure up to the evidence.
“Despite a multitude of promises that the law would only lead to lower rates, in Eastern, Western and Northern Maine, more than 96% of businesses saw their premiums increase.”
Tipping also points to articles claiming that while the young benefited from PL 90, the sick and the old saw much higher premiums.
It seems Tipping’s basis for claiming that 96 percent of businesses in Eastern, Western, and Northern Maine experienced higher premiums stems from a report by Consumers for Affordable Health Care which has since been taken off the web.
Research we conducted in 2013 actually shows that the group insurance market in Maine improved in the aftermath of PL 90. When you compare the rate increases businesses experienced in 2010 (pre-PL 90) and 2012 (post-PL 90), the law’s impact is clear. In 2010, only 2.9 percent of businesses in the group market saw declines in their premiums. In 2012, that number had grown to 17.5 percent. On the other end of the spectrum, just 0.1 percent of businesses saw more than 100 percent increases in their premiums in 2012, down from 0.5 percent in 2010.
Does that mean that Tipping is still able to identify a few examples of significant rate increases? Yes, but it’s disingenuous to highlight those cases without the proper context.
Thanks to Maine’s innovative high risk pool, elderly patients in the individual market also experienced significant savings. According to a recent report, “[PL 90] meant individuals in their early 20s saw savings of roughly $5,000 per year while those in their 60s saw savings of more than $7,000 per year. Those lower-cost new options even had lower deductibles than the higher-cost plans under the old system.”
“…the small reduction in premiums for some health plans was due more to the implementation of the Affordable Care Act a year later (and a new $4 per-plan-per-month tax given directly to the insurance companies) than stripping away the insurance regulations.”
Far from improving Maine’s insurance market, the Affordable Care Act unraveled many of the beneficial reforms PL 90 had instituted. For example, during the 18 months before PL 90’s implementation, Maine’s individual market was in a death spiral–Anthem, the largest insurer in the market–saw enrollment drop by 7 percent during that period. Once PL 90’s high risk pool was implemented, however, the market immediately began to stabilize. In the first 18 months of the high risk pool’s operation, Anthem enrollment grew by 13 percent and premiums started dropping.