Maine Allows Insurers to Increase Health Insurance Rates

There’s an ongoing debate over whether more or less regulation of the health insurance industry will help to lower customers’ premiums.  The Boston Globe published Julie Appleby of Kaiser Health News’ article, “Loosening health insurance rules in Maine has produced mixed results after 6 months.”  Last year, health insurance regulations in Maine changed in an attempt to reverse the fact that they have some of the highest health insurance premiums in the United States.  The promises given to Maine residents with this legislation were that everyone’s premiums would decrease and that more health insurance companies would enter the market to increase competition.  After six months, a little bit has changed, but not much.

No new health insurance companies have entered into Maine’s marketplace, hopefully some will with more time, but they haven’t yet.  And while people under the age of 40 did see lower health insurance rates across the board, older people mostly saw rate increases.  About half of individuals saw health insurance increases averaging 1.7%, but as high as 18%.  An insurance consultant said that regulations are not about lowering overall premiums, but making insurance premiums more fair.  This tends to lower rates for the young and increase rates for the old, since health insurance costs tend to increase the older people get.

Maine’s regulators made three large changes six months ago.  They allowed insurers more freedom to vary premiums, gave them the ability to issue rate increases of less than 10% without state approval, and made a “reinsurance” fund that is meant to protect insurers from the costliest medical bills.  Anthem Blue Cross and Blue Shield, the top insurer in Maine, increased the rates of 54% of their policyholders.  They do have 3.5 times more clients over the age of 55 than they do under the age of 40.  Around 10% of small businesses saw their rates go down compared to 3% before the changes, but that means that 90% did not.  Some experts do believe that even those who saw rate increases had lower increases than they would have before Maine’s new regulations.

Many of the new regulations in Maine mimic changes that are likely to occur soon from the Affordable Care Act.  There is a good chance that we will see some similar results nationally, but there will be help in the form of subsidies to help some people pay for their health insurance costs.  Six months is too soon to make a declaration of success or failure with this program, but we’ll continue to watch it closely.

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