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.
Do the people of Maine understand what’s in store for them? No, says Ditre. “This was a slogan-driven effort by the legislature and by Republican proponents. There was little debate and they (legislators) were instructed not to speak on the floor about the bill.” If the news media were waiting for good, complete explanations, there were few to get. Perhaps that explains the less-than-desirable coverage from the Press Herald. The paper simply passed along those slogans as news, without explaining to readers how deregulating health insurance companies would help or hurt them. In fact, many stories didn’t even report that the insurance market had been deregulated.
Campaign Desk looked at a sample of stories from the paper and found them wanting. The day the governor signed the bill, readers learn in the lede that his signature puts an “end to a bruising political brawl.” In the second graph, they learned about a “testy floor debate that displayed the tensions that have emerged between the parties.” In the fifth graph, they learned that “hostilities peaked.” The story never mentioned the rate deregulation, simply saying in the fourteenth paragraph of a twenty-paragraph story that “the 45-page bill overhauls the health insurance market for about 40,000 people—those who buy independently or through employers whose companies have 50 or fewer workers.” At the end, readers got the money line with the paper reporting: “Republicans say the changes will foster more competition in the health insurance market. They say the reforms will encourage more young people to buy insurance, and that a larger pool with more healthy people will lower premiums for all groups.”
A few pieces did touch on the consequences for older people who will have to pay more. Perhaps that was easier than understanding the state’s insurance regulations. But even here, the stories too often relied on quotes from legislators to tell the story. In one case where a Democratic legislator said higher premiums will cause older people to drop coverage, the reporter allowed two Republicans to counter her. One said he was convinced the bill would lower premiums for everyone, while the Senate majority leader said regulations aimed at protecting older people from high premiums have simply driven young people out of the market causing higher premiums for everyone. “This system is broken and it’s time to take a different approach,” the paper reported. Ah, those slogans!
The background leading up to the political drama was MIA in many of the Press Herald stories we looked at. Campaign Desk closely followed the Anthem case and Kofman’s efforts to lower the rates for policyholders, reporting that the outcome may be a harbinger of things to come for the rest of the nation. “Too many times the companies have found a way around the rules, and they’ve never been shy about using the courts when they dislike something a hard-hitting regulator has done,” I wrote. “How this case is decided could reveal much about whether insurance market reform (the crux of the federal health law) will actually help the public or whether it will be business as ususal.”
Two years ago Kofman challenged an 18.5 percent average rate increase, allowing only an eleven percent raise and no increase for profit. Anthem took her to court. A lower court agreed with her, but the state’s highest court dismissed the case since a new rate request made the matter moot. The new request was for a 23 percent increase on average, but Kofman granted only 14 percent, this time allowing a small amount for profit. Again Anthem appealed. The court stayed the appeal waiting for guidance from the higher court, which never came. This year the company asked for nearly a 10 percent average rate increase; regulators granted half that amount with a one percent for profit. Anthem has not yet appealed.
Who won and who lost? The state successfully defended the rate reductions, and despite Anthem arguments that rates were inadequate, the company made a profit. On the issues of legal precedent, it was a draw. Large insurers have other ways to press their agendas. Anthem won big in the legislature—ridding themselves of pesky rate regulations while showing the world that the mighty insurance industry is still mighty enough to thwart health reform. As for the public and the press, the word “losers” seems to apply.