Maine’s superintendent of insurance wants to scale back many of the health insurance mandates of the 1990s that were designed to make coverage more affordable and available to the old and sick.
Superintendent Alessandro Iuppa argues that the reforms have only served to drive the young away from health insurance. The remaining policyholders have higher medical expenses that drive up insurance costs for the very people the mandates were intended to help.
One consumer group is already crying foul. Iuppa expects plenty of resistance, but he said Friday the time has come to make insurance more affordable for some, while making Maine more attractive to insurers.
“What we’re looking to do is to try to create a scenario where more people will come back in the marketplace,” he said. “I don’t think there is anything we could do to have premiums decrease, all things being equal. I think there are things we could do to [slow] those increases.”
The Bureau of Insurance’s proposal would remove many of the legislative initiatives that insurers have said are a burden. The proposal would:
. Drop requirements that HMOs offer individual health policies. In essence, this means there would no longer be any requirements that individual insurance be offered in Maine.
. Allow insurers to charge higher premiums to the old and ill, and less to the young by relaxing “community-rating” standards.
. Let insurers charge customers more because of bad health or dangerous occupations.
. Eliminate the requirement that insurers offer standardized group plans to companies with 50 employees or less (a group representing 96 percent of Maine workers).
. Encourage insurers to develop new “pilot” products that might also be offered in New Hampshire and Vermont if those states also adopt new regulations.
The recommendations come at a time when Maine, like other states, is facing a crisis of spiraling health care and insurance costs. According to the Bureau, small business’ insurance rates are rising on average about 15 to 25 percent this year. Some companies with fewer than 50 employees have seen increases of close to 50 percent. Individual isurance rates are soaring.
Some consumer advocates interviewed this week were quick to criticize the idea of rolling back hard won mandates from the 1990s.
“We think it’s not the role of the Bureau of Insurance to hand profits to the insurance companies,” said Joseph Ditre, executive director of Consumers for Affordable Healthcare. “We should be looking at methods of controlling costs, not shifting them.”
Ditre said the mandates have “protected people from the excesses of the industry trying to gouge people for profits.”
Dr. Robert Keller, a Belfast physician who chaired a gubernatorial commission to study the state’s healthcare system in 1995-96, also questioned parts of Iuppa’s proposal Friday.
He said removing mandates requiring insurers to offer individual insurance has long been a goal of the industry. Insurers are itching to get away from that costly marketplace, he said.
In defending the reasons for eliminating individual policies Friday, Iuppa said mandated HMO coverage sounds great except the policies are priced too high for most people. Instead, he said insurers should have more leeway to develop new products with higher deductibles.
High deductible, or “catastrophic” policies, require the insured to pay the first $5,000, $7,500 or even $10,000 for care before insurance kicks in. As insurance rates have risen and companies like Tufts Healthcare have pulled out of Maine, leaving customers scrambling, these products have become popular.
Aside from the risk taken with such high deductible policies, critics say they encourage people to avoid preventive care. As a result, health costs rise across the board.
Iuppa said some insurers offer “riders” that cover preventive care like mammograms and pap-smears. Still, that’s an additional expense consumers often spurn.
The idea of eliminating the individual HMO mandate was promoted by Anthem this summer, a fact that doesn’t surprise Keller. He said the company’s actions since buying the nonprofit Blue Cross Blue Shield of Maine have conflicted with its earlier statements.
“They’ve done just what a lot of people thought, which was to make some tough-nosed business decisions,” Keller said.
Sharon Roberts, an Anthem vice president ho presented some of the ideas being promoted by Iuppa to the Banking and Insurance Committee in July, said the insurance superintendent’s proposals are welcome.
Anthem has a near monopoly on individual insurance policies in active to competitors, she said.
Why would Anthem want to encourage competitors? “It’s good for the state of Maine to have competition,” she said “We believe it’s good for us to have a competitive market – we believe we’re more efficient [when competing].”
Another controversial proposal by Iuppa is to relax community rating bands for small-group and individual insurance. Currently, insurers use a baseline for premiums for all those insured under a particular insurance product. Maine law requires that the highest rate-payer pay no more than 20 percent more than that baseline, while the bottom ratepayers pay no more than 20 percent less.
Iuppa would change that to 30 percent in the first year and 40 percent in the second-creating a much wider range of costs for people and small companies buying the product.
“That’s an unfortunate step because it will allow the carriers to segment the marketplace again and charge higher premiums to less healthy people,” Keller said. “It almost has to increase the number of uninsured and underinsured.”
About 160,000 Mainers have no insurance at all. And a recent study by Consumers for Affordable Health Care and the Maine Center for Economic Policy found that 10 percent of businesses with fewer than 50 employees dropped health coverage entirely between 1996 and 1999.
As a matter of business practice, companies like to insure pools of healthy people. Higher rates for the unhealthy discourages enrollment, which lowers the risk to the company of higher claims rates.
Jim Harnar, a spokesman with the Maine Hospital Association, said while hospital officials praise Iuppa for bringing some innovative ideas to the table, they oppose a move away from community ratings.
Hospitals want to see more and more people get insurance and this proposal, on the surface, looks like it would have an opposite effect-especially among the old, he said.
“That’s a problem for us. Typically it’s the older people who need hospital services,” he said. “We think that proposal needs to be thought through further.”
Robert Woodbury, chairman of the Governor’s Commission on Healthcare, said he was aware of Iuppa’s proposals, but he would defer comment until the commission releases its own proposal later this month. It will address some of the same issues, he hinted.
As to relaxing the rules regulating the extent to which insurers can use age, occupation and health status as a basis to charge higher premiums to some, Iuppa said it’s to a degree a matter of people taking responsibility for their own actions. If they smoke, are overweight or don’t exercise they should bear some responsibility for the fact that their actions could lead to higher health care costs.
He said how that relaxation of standards is translated into policies would be up to the insurance companies. Then it would be reviewed by the Bureau, he said.
Iuppa expects the proposals will change with debate during the legislative process. But he said he wouldn’t avoid the issues no matter how painful.
“It’s a discussion that needs to be held,” he said. “I’m not in a position where I’m going to shy away from raising questions that need to be raised.”