Rates for individual health care plans in Maine are set to drop as much as 60% this July as a result of health reform law PL 90, adopted in March 2011.
PL 90, the free-market-based health reform law, was passed last March by a Republican majority in Maine’s legislature. Governor Paul LePage signed the bill in a ceremony at the State House amid cries from Democrats who insisted it would not reduce costs.
“The law takes Maine in the wrong direction,” said Emily Cain, the house Democrat leader at the time the bill was passed.
But, if you’re a Mainer looking for individual health coverage, you’re going to be encouraged by the direction private health care costs are going: down.
Young people are big winners in the rate decreases. A 19- to 24-year-old will be able to purchase a health plan with a $2,000 deductible for about $200 a month, compared to the current rate of $450.
A 19- to 24-year-old with a high deductible of $10,000 could carry a policy for just $100 a month—less than the rate for a typical iPhone plan. This is especially important for those in that age bracket who may no longer qualify for MaineCare if cuts in the supplemental budget are approved this week.
“Since the law took effect this past October, we have primarily seen the law’s impact to Maine’s small group insurance market,” said Joel Allumbaugh, president of National Worksite Benefits Group and health care expert at The Maine Heritage Policy Center. “Now we are seeing significant progress in the individual insurance market, with rate decreases up to 60%. It’s a huge step forward for Maine.”
The rate filing, submitted this week by Anthem, the primary insurer offering individual plans in Maine, is not yet official. The rates would take effect in July, but first must be approved the state Insurance Superintendent.
If the rates do take affect, they will provide relief for those paying for private individual insurance, as well as those who want to purchase a plan.
PL 90, the health reform law that Republicans guided through the legislature despite heated opposition from Democrats, expanded the “rate bands” to allow a wider variation in cost between different-aged applicants.
In the past, insurance companies had to treat a 21-year-old and 55-year-old as basically the same. The new law allows for distinction in age groups.
Democrat Rep. Sharon Treat was one of the strongest advocates against PL 90, also known as LD 1333, during the debate about the health reform law. “Unfortunately, in the rush to pass LD 1333, the Republican majority is creating obstacles to better coverage and reduced costs,” she said at the time.
Now, it’s evident that reducing costs to individuals is exactly what the law has done.
Even the “closed book” plans, which are individual plans that are renewing, rather than brand-new plans, are seeing benefits from the new law. In the past, the policies in the “closed book” category have seen increases well above 10% annually.
In the July Anthem filing, the average rate increase is just 1.7%, good news for those holding the policies.
Some of the new plans being offered in the individual market include mental health services at no extra cost. In the past, the plans required a “rider,” which raised rates by as much as 30%. Not only do the new plans cover mental health, they cost significantly less.
A current plan for a 45- to 49-year-old with a $2,250 deductible, without covering mental health, would cost $601 per month for just one person.
The new plan, which covers mental health, would have a $2,000 deductible and cost the individual just $362 per month, a 40% rate decrease, according to the Bureau of Insurance.
For those 60 and over, the current plan would cost $859 per month. As a result of the health reform law, the new plan would cost $645, a 28% decrease per month.
This is before new competition enters the health care market in Maine. Allumbaugh said he anticipates that additional insurers will enter the market, but are not prepared to offer products as early as July.
When such competition does enter the market, it would drive rates even lower, Allumbaugh said.
Getting more young people into the market is major plus for all Mainers and a main goal of the law, Allumbaugh notes. “As this happens, the claims experience tends to improve and it can lower the rates even further for all age groups,” Allumbaugh said.
“This is precisely the impact the health reform law aimed for: lowering rates generally, but in a way that helps our insurance markets reverse the death spiral and begin to grow,” he said.
This article is published in TCT with permission from TheMaineWire.com.