Legislature passes landmark bill to reform health insurance market

May 16, 2011

AUGUSTA – The Maine Senate passed landmark legislation today to revamp Maine’s health   insurance market. The measure, LD 1333, is designed to generate more competition and more choices and bring rates closer to national norms. It also sets up a Guaranteed Access Plan to make sure Mainers with pre-existing conditions can obtain affordable insurance and cannot be denied coverage.

On May 13, the House voted 78 to 68 for final passage. The Senate voted 24 to 10. The vote was bipartisan in both chambers, with two Democrats voting with the Republican majority in the House and three Democrats and one unenrolled member joining majority Republicans in the Senate.

House Speaker Robert Nutting hailed final passage as a major achievement. “For years, Maine has suffered from a broken health insurance system,” he said. “Costs are so high that 130,000 people can’t afford to buy coverage. Employers and families with coverage are at the breaking point. Failure to act would have been irresponsible. This plan is based on proven systems in dozens of other states where rates are lower – sometimes dramatically lower. To get our economy growing again and create jobs, we need an insurance system that Mainers can afford.”

Senate President Kevin L. Raye (R-Perry) said final enactment represents an important victory for the people of Maine in the long battle against skyrocketing insurance premiums. “The status quo has resulted in too many Mainers losing insurance coverage and thousands of others threatened with that loss,” he said. “The bill we sent to the Governor today offers hope by injecting competition and choice into the system. It also protects rural residents and those with pre-existing conditions, as well as creating a new Guaranteed Access Plan to cover costs for those with chronic illnesses.

“Despite the appalling scare tactics and misrepresentations by those who sought to derail needed reforms, today’s vote was a bipartisan one that reflects a good faith effort to clarify and strengthen this bill as we seek to bring relief and wider coverage to Maine people,” he added.

Rep. Wes Richardson (R-Warren), the sponsor of the bill, said the Guaranteed Access Plan is a reinsurance program modeled on a successful version in Idaho, a state with demographics similar to Maine’s. “The chronically ill and individuals with pre-existing conditions will choose from the same insurance plans as everyone else,” he said. To make sure their premiums remain affordable, the state will provide subsidies from the reinsurance fund, to be financed by a monthly assessment of $4 on all privately insured Mainers.

“With this reform package in place, insurance carriers will be able to offer a more diverse array of insurance products to fit a variety of personal and business budgets,” said Rep. Richardson, the House chair of the Insurance and Financial Services Committee. “Increased competition and more affordability in coverage options will enable young and healthy people to buy insurance policies, thereby expanding the pool and lowering costs across the board.”

The initiative also allows individuals to purchase health insurance from companies licensed in other states. Specifically, it permits carriers authorized to sell insurance in Connecticut, Massachusetts, New Hampshire and Rhode Island to offer their individual policies for sale in Maine starting in 2014. Mainers have repeatedly voiced strong support for opening insurance markets across state lines. Rates elsewhere, such as in New Hampshire, are significantly lower than in Maine.

On the business side, companies with fewer than 50 employees would be allowed to band together to create larger insurance pools to obtain better rates. For companies with 20 or fewer employees, the plan also provides a tax credit if they maintain wellness programs. The credit would range from $100 per employee to a maximum of $2,000.

“Currently, the high cost of health insurance is a factor that dissuades new businesses from locating in Maine,” said Sen. Rodney Whittemore (R-Somerset), Senate chair of the Insurance and Financial Services Committee and a co-sponsor of the legislation. “By allowing businesses to band together, they will be able to provide employees with health insurance at a lower cost. Ultimately, these reforms will make Maine a more attractive place for both new and existing businesses and will be a boost for job creation.”

The plan has been crafted to mesh with the federal Affordable Care Act (ACA) in the event the law survives court challenges. If the ACA is struck down, the new plan provides a structure that lowers costs, expands choices and moves Maine into the American mainstream. In short, the initiative creates certainty for Mainers regardless of the fate of the federal health care reform law.