Report Finds Older Mainers and Individuals and Small Businesses in Rural Areas Pay More under Health Insurance Law

Gorman Actuarial findings validate MECEP’s analysis and provide evidence of the need to fix the law
Augusta, Maine (Tuesday, January 17, 2012)- The Maine Center for Economic Policy (MECEP) and Consumers for Affordable Health Care (CAHC) asserted that a report by Gorman Actuarial to be presented to the Maine Legislature’s Joint Standing Committee on Insurance and Financial Services (IFS) today confirms key criticisms opponents raised about PL 90, the rollback of health insurance protections enacted in 2011.
“Gorman Actuarial found that thousands of older Mainers and small businesses in rural Maine must now pay more for health insurance under the new law,” said MECEP Executive Director Garrett Martin. “It validates MECEP’s analysis last spring which warned that while some individuals and businesses would realize lower rates, others would see their costs increase. PL90 is a flawed law that the Governor and the Legislature must act to fix. It gives too much power and profits to private insurance companies, undermines important consumer protections, and fails to address the issues that result in out-of-control health care costs.”
“Ironically, the Gorman Actuarial report points out that the Affordable Care Act (ACA) passed by Congress in 2010, not PL90, will provide real savings for consumers in the long run,” said CAHC Policy Director Mitchell Stein. “It is vitally important that the LePage Administration and Legislators do everything they can to maximize the potential benefits of the ACA for Maine people and businesses now. At a time when Maine people and businesses are struggling, we can ill-afford ideologically driven policy prescriptions. Ignoring credible information and fact-based analysis is akin to giving every patient the same treatment regardless his or her condition.”
The Maine Bureau of Insurance commissioned the report, “The Impact of PL90 on Maine’s Health Insurance Market,” as an independent analysis of the new law’s effects on the state’s consumers. MECEP and CAHC maintain that a comparison of what proponents of PL90 said about the law during the 2011 legislative deliberations and the conclusions of the Gorman Actuarial report clearly demonstrates that many claims by PL90’s supporters were mistaken.
What proponents of PL90 claimed about its potential impact on consumer premiums:
“LD 1333…will not increase premiums on older people.” – Governor LePage, May 29, 2011
“LD 1333 will not fix the high cost of health care itself but will lower the cost of health insurance for all Maine citizens.” – Senator Whittemore from Somerset, May 11, 2011
“I’ve heard that the changes to community rating are going to hurt those living in rural Maine and older Mainers. I disagree…” – Representative McKane from Newcastle, May 12, 2011
What Gorman Actuarial found:
“Beginning July 1, 2012, insurers can charge rates using a 3-to-1 age band on the open block and additionally can surcharge premiums up to 50% for geography. This change will result in higher premiums for the older demographics and for individuals who live in more expensive regions.” – The Impact of PL90 on Maine’s Health Insurance Markets, p. 14
“11% of groups which include 7% of Small Group members will experience premiums more than 10% higher (average 20%) than what they would have experienced in the absence of PL90. In general, these are groups with higher average ages or groups located in areas of Maine with higher geography rating factors. (Down East, North, and North Central)” – The Impact of PL90 on Maine’s Health Insurance Markets, p. 25
MECEP and CAHC acknowledged that some individuals and small businesses, primarily in the individual insurance market have experienced rate decreases but noted that the Gorman Actuarial report attributes these savings to the subsidy PL90 gives to insurance companies that is funded by a monthly fee paid for by all those who have private insurance. They again cited claims PL90 proponents made last spring with the report’s findings.
What the proponents of PL90 claimed about the new law’s $4 per month “fee” on private insurance premiums:
“The $4 per month assessment…will help cover the claims of individuals with high medical costs. We anticipate the $4 assessment will be lowered during the next year or so as well.” – Governor LePage, May 29, 2011
What Gorman Actuarial found:
“… a $5 million deficit after applying the full $4 PMPM (per member per month) market assessment. The optional assessments to cover net loss could be used to cover this deficit…this translates to 89 cents per assessed member per month, in addition to the $4 PMPM.” – The Impact of PL90 on Maine’s Health Insurance Markets, p. 11
The Maine Center for Economic Policy advances public policies that help Maine people prosper in a strong, fair and sustainable economy. We advance this mission through high-quality research, analysis, citizen education and coalition building. MECEP is an independent, nonprofit, nonpartisan organization.
Consumers for Affordable Health Care is a non-profit, non-partisan organization that has been helping Maine people get quality, affordable health care for more than 20 years. If you have any public or private insurance questions please call our toll free consumer HelpLine at 1-800-965-7476.