If the old political adage “as goes Maine, so goes the nation” has any currency these days, health insurers may have lost last year’s battle—but they’re winning the war. The intense drama in the Maine legislature the last few weeks shows that the political power of the insurance industry has not diminished one bit. Gov. Paul LePage and his fellow Republicans rammed through a law that eliminates rate regulation in the individual and small group health insurance markets and effectively deregulates Anthem Health Plans, the state’s biggest carrier and a subsidiary of WellPoint, the nation’s second largest insurer.
“It’s hard to think of anything the insurance industry didn’t get,” says Joe Ditre, who directs the advocacy group Consumers for Affordable Healthcare. What they got is no trivial matter since Anthem and the state’s insurance superintendent Mila Kofman, who just resigned, have been arguing for two years over how much the carrier can charge customers in Maine. Now we know the outcome. They can charge whatever they want. It’s not clear that the people of Maine know this, though, given the lackluster coverage by the Portland Press Herald, the state’s biggest newspaper.
For years Maine’s insurance regulators had to give their blessing to rate increases requested by insurers—in regulatory jargon, that was called “prior approval.” The new law exempts virtually all companies selling insurance to small businesses from such rate reviews. What will control those rates now? It seems that the legislature prefers several other mechanisms: market pressures; reliance on the feds to shame a company that raises rates too high; and enforcement of a provision in the federal reform act that requires insurers to pay out in medical claims a minimum percentage of the premiums they collect. Carriers like Anthem have no trouble meeting that minimum standard, so they will hardly be penalized. The legislature deregulated the individual market in almost the same way—again benefitting Anthem, a big player in that market.
The new Maine law may well be a template for other states that will give the industry what it has wanted all along. It will make older policyholders who may be ill pay more for their coverage. By 2016, carriers selling in both markets can charge them premiums that are five times higher than they charge a younger person. The differential gradually increases between now and then. That’s a way to get around the underwriting restrictions in the federal law—you remember the rules that say carriers have to insure everyone, even those at death’s door. To compensate carriers for their greater risk, Congress allowed them to charge older people three times more. Insurers argued that was not enough. In Maine, they now have an out. If for any reason, the federal law becomes non-binding, insurers can follow the Maine law, which, of course, lets them charge higher premiums. Before legislators changed the law, insurers could charge an older person only one and a half times more than it charged someone younger—a consumer-friendly provision that separated Maine from many other states.
Lawmakers also approved the so-called selling-across-state-lines solution to high insurance costs, another long-sought goal of conservatives and the insurers as a business-acceptable way to bend the proverbial cost curve. The cry of “more competition” always sounds reasonable as a cost-containment measure, even if there’s little evidence to support the efficacy of that approach. It will mean, though, that carriers from other New England states except Vermont can sell policies in Maine without a license, and it exempts them from complying with many of the state’s tough consumer protection laws. It sure sounds like “buyer beware” time for consumers.