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Press Release

New State Health Insurance Law: Higher Premiums, Worse Product Choices, and Weaker Protections

For Immediate Release: September 4, 2012

For More Information, Please Contact:

Joe Ditré, Executive Director, 207.622.7083 (o); jditre@mainecahc.org;
Greg White, Public Relations Coordinator, 207.622.7083 (o)

Report Evaluates New Maine Law Based on Insurance Company Filings To Date

(Augusta) Maine’s largest consumer health organization, Consumers for Affordable Health Care, released a report today based on insurance company filings with the Maine Bureau of Insurance. The report, entitled Few Winners, Many Losers: Evaluating the Impact of Key Provisions of Maine’s New Health Insurance Law To Date, found that Maine’s new health insurance law called Chapter 90, passed by the new Republican majority in the Maine Legislature amid a firestorm of controversy last year, resulted in the following:

  • higher premiums for the majority (54%) of individual policyholders,
  • higher premiums for the overwhelming majority (90%) of small business policyholders especially those with older workers or in rural areas,
  • worsened product choices in the individual market,
  • higher taxes ($22 million) on all insureds in Maine for a reinsurance program that supported higher profits to the state’s largest insurance company for its individual product ($1.8 million),
  • weakened consumer protections including how insurance company rates are reviewed.

The report, Few Winners, Many Losers: Evaluating the Impact of Key Provisions of Maine’s New Health Insurance Law to Date, used filings with Maine’s Bureau of Insurance that reflected the new law. Four key provisions of the new law were evaluated:

  • individual and small group premium rates;
  • closed books of business and new product choices;
  • the new reinsurance tax on all insured Mainers;
  • the new standard for reviewing individual rate filings.

In each category, the insurance company filings and Bureau determinations showed higher premiums, worse product choices, higher profits to Maine’s largest individual insurer, and weaker review standards.

Joseph Ditré, executive director of the consumer group and author of the report said “The report used statewide insurance company filings rather than local anecdotes. The filings clearly refute claims by the new law’s proponents. The promise of new young, healthy uninsureds returning to the health insurance market and thereby lowering prices for everyone is just not happening. What is happening is that insurance companies are raising premiums on small businesses in all geographic areas, especially on businesses with older workers and those in rural areas. That means businesses and individuals, who have been paying high rates just to keep their coverage, may now be forced to drop their coverage based on a false promise.”

WoodenBoat Publications Inc., a small business located in Brooklin, Maine, faced significant rate increases in 2011 and were forced to cut back on their plan, which covers 31 employees. Even with less coverage and an already high deductible, their quote this year was a rate increase of more than 32%, an increased cost to the business of $75,144.

“This increase is a huge problem for us. I’ve said for a while that I’m running out of bunnies to pull out of the hat. Now, I’m completely out of bunnies. I don’t know what we’ll do in the future,” said Jim Miller of WoodenBoat. “They’re basically selling health insurance based on your zip code and your age and for this company, based in Brooklin, Maine, both of those are going against us.”

Unfortunately, they are not alone. Among the key findings in the report are that premiums increased for the overwhelming majority of small businesses throughout every geographic area in the state, the areas with the most increases were in the counties of Aroostook, Penobscot, Piscataquis, Knox, Hancock, Lincoln, Waldo, and Washington. Among the few decreases that did occur, they did not have as much of an impact as proponents of the law had hoped for. Specifically:

  • Over ninety-six percent (96.3%) of small businesses in Northern Maine received rate increases under Chapter 90 in the two quarters (4 Q 11 and 1 Q 12) shown; less than four percent (3.7%) received rate decreases.
  • Almost ninety-seven percent (96.6%) of small businesses in Eastern Maine received rate increases under Chapter 90; while less than four percent (3.4%) received rate decreases.
  • A full ninety-three percent (93%) of small businesses in Central Maine received rate increases under Chapter 90; while only seven percent (7%) received rate decreases.
  • Almost ninety-seven percent (96.6%) of small businesses in Western Maine received rate increases under Chapter 90; under four percent (3.4%) received rate decreases.
  • Almost eighty-five percent (84.5%) of small businesses in Southern Maine received rate increases under Chapter 90; while almost sixteen percent (15.5%) received rate decreases.

The new law also significantly weakens the rate review process, as the report describes in detail. The rate review process had saved Maine’s Anthem policyholders at least $2 million in 2011 alone and, had Chapter 90 been in place at that time, none of those savings would have been realized.

The report confirms the arguments made by opponents of the new law as it was being pushed through the Maine Legislature in 2011. There was a grave concern that the law would further create “Two Maines” and create a few winners in urban Southern Maine at the expense of rural areas in the majority of the state, particularly Northern and Eastern Maine. Older people living in rural areas are being hit the hardest. Proponents of the law said that an influx of young insureds would help to lower costs for everyone, but there is absolutely no indication that has happened.

View the complete report.

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