Questions & Answers                                                                                            

 


Maine 's individual health insurance market

1. What is the individual health insurance market?

The individual insurance market is for people who cannot buy group insurance through an employer or an association. People who buy insurance as individuals are often self-employed, retired but not yet eligible for Medicare, or young people just starting out in the workplace and not yet able to obtain coverage through an employer.


2. Why is individual health insurance in Maine so expensive?

The cost of health insurance in Maine’s individual market is higher than in almost any other state. Rates continue to go up for three primary reasons:

  1. The increasing cost of hospital services, physician care, outpatient procedures and prescription drugs;

  2. The increasing use of medical services by people in the individual insurance market; and

  3. Outdated laws that were passed with good intentions to protect consumers, but over time have actually made it more difficult and less affordable for people in need of individual insurance coverage.

It is this last reason, specifically certain laws passed nearly 15 years ago, that has made it especially difficult to purchase comprehensive, affordable individual insurance in Maine.  


3. What laws are we talking about?
  
In 1994, laws were passed 1) to guarantee coverage for any individual seeking it, a policy known as guaranteed issue; and 2) to limit the factors, such as age and health, that could be used to determine the price of coverage. This is known as community rating.


4. What problems have these laws caused?
States with guaranteed issue and strict community rating laws have seen:

  • Health insurance companies driven from the market, leaving consumers with few choices for coverage;

  • Younger and healthier people leaving the market, causing prices to increase for everyone;

  • Health insurance companies left with no choice but to increase deductibles in order to limit price increases for members.

Maine is no different. Since 1994, four of five carriers have stopped writing new business in the individual market.

In addition, the average age of a new member in Anthem Blue Cross and Blue Shield in Maine’s HealthChoice product is 42. In Anthem Blue Cross and Blue Shield in New Hampshire, the average age of people enrolling in individual plans is 33.

When you compare the cost of individual coverage in Maine to the cost in New Hampshire, the differences are striking. While the average monthly premium for similar coverage is virtually the same – $235.30 in Maine compared to $227.69 in New Hampshire – the average deductible in Maine is $7,800 compared to $1,650 in New Hampshire. That’s a difference of more than $6,000 a year!


 5. Do other states have this problem?

This problem is not unique to Maine. Other states like New Hampshire and Kentucky have faced the same situation, but legislatures in those states and in other states that had similar laws have updated their insurance laws and dramatically improved the cost and availability of individual coverage.


 6. What steps have other states taken?

Most other states that have faced problems similar to Maine’s have enacted some variation of the following two reforms:

  1. They have established a high risk pool or reinsurance pool mechanism that helps pay the cost of claims for the small number of people with expensive medical conditions. A well-designed risk pool law ensures that no one is denied coverage, but putting the highest users of health care services together in the risk pool and subsidizing their costs lowers the costs for everyone else.

    In most states, high risk pools or similar mechanisms are funded primarily through premiums charged to individuals for coverage in the pool and a small assessment to insurance carriers based upon the total number of people they provide coverage for in the state.

    While high risk pools are generally managed by an appointed board, benefits are usually administered by private insurers. Currently, 34 states have established high risk or reinsurance pools that provide health care benefits to more than 180,000 people.


  2. Many states have also broadened community rating bands to allow more flexibility in the pricing of premiums. Today, Maine law states that insurers cannot vary the rate based on health status or claims experience, and overall rates are limited to plus or minus 20% of the community rate based upon certain factors. Insurers are forced to charge young people more than they would otherwise pay in order to subsidize older individuals enrolled in the same plan.
The unintended consequence is that young people often choose not to purchase individual health insurance, leaving only the sicker and older individuals in the individual market. Premiums become higher for all individuals.

Giving insurers more flexibility in setting prices also will bring people back into the individual market, helping to lower the average cost of insurance.  


7. Why can’t Maine do the same thing?
  
We can, and we must. A lot has changed in 15 years – especially when it comes to health care – and our laws have to be updated to reflect the challenges we are facing. We have the opportunity to learn from the experience of other states and adopt changes that will help make individual insurance in Maine more affordable, give consumers more choices, and ensure that all people have access to comprehensive health insurance coverage.


 8. Will changing these laws mean that some people won’t be able to get insurance?
 
Legislation supported by Anthem Blue Cross and Blue Shield in Maine would ensure that all individuals would have access to comprehensive insurance coverage. In fact, the changes we support will make coverage available to more people by making it more affordable and giving people more choices. No one would be denied coverage, although some people might have to purchase coverage through the high-risk or reinsurance pool or a similar mechanism. As for the ability to renew coverage once you have it, federal law already requires that all individual health insurance policies are “guaranteed renewable.”
 

 9. So how do we pass reforms in Maine to lower the cost of individual coverage?
  
There are two individual market reform bills that will be before the Maine Legislature next year: LD 1760, sponsored by Rep. Don Pilon (D), and LD 1047, sponsored by Rep. Michael Vaughn (R). Either one could serve as a vehicle for reforming Maine’s individual insurance market to improve the affordability and choice of products for Maine people.

We are working with key legislators to find the most workable solution for Maine. We encourage you to sign up on this website so that we can help you contact your legislators to voice your opinion about the individual market when they return to Augusta in January.

In the meantime, we also hope that you will tell us your story and help us make the case for changing Maine laws now to make your insurance more affordable.