Anthem Blue Cross and Blue Shield of Maine has filed a request with the Maine Bureau of Insurance for permission to increase premiums in the individual health insurance market by an average of 20.5 percent, effective Jan. 1, 2007. Anthem is the only health insurer in Maine that offers health insurance to individuals, and in my opinion, the proposed increase, if granted, will be a severe blow to the effort to make health insurance more affordable in our state.
The physician members of the Maine Medical Association are gravely concerned that an increase of this magnitude will negatively impact access to healthcare for many citizens of Maine. It is likely that this increase will result in even more Mainers becoming uninsured, thus directly increasing the cost of healthcare for those persons remaining insured. If approved, the premiums for individuals would be as high as $3,000 per month for family coverage for an adult between the ages of 45 and 54, depending on the level of deductible, co-payment and co-insurance. A monthly premium of $3,000 per month is quite simply a cost that most Maine citizens cannot afford.
At a time when Gov. Baldacci, the Maine Medical Association and other parties are seeking to increase healthcare access, Anthem’s proposed action will do just the opposite. But this is not unexpected news. A few years ago, a report issued by the Superintendent of Insurance noted that the individual health insurance market was in a death spiral and was not sustainable over time. As rates increase, more people drop their insurance and costs increase for the remaining members of the pool. In fact, at this point, just one percent of the individuals in the individual market account for over forty percent of the costs.
There are no easy solutions to this problem. While it will take some time to review all the details of the proposed rate request, two major questions are apparent. The first question is whether Anthem should be able to separate profit and losses in each of their “insurance categories,” or should the company be required to calculate its corporate profit and losses from all categories on an aggregate basis.
While Anthem claims a financial loss of $6 million in the individual market, it also realized corporate profits of $34 million overall. Currently, Maine insurance rules allow the company to present profit and losses separately in this manner. One solution to this problem would be to require Anthem to subsidize the loss in the individual market with their ample profits in the group market. On the other hand, this approach could lead to increased premiums in the small and large group markets.
Another area to be examined is community rating. Should the overall health of the population be looked upon as a whole, or should insurers be allowed to aggregate people into bands based upon anticipated healthcare needs, and charge premiums accordingly?
A potential solution to this question could be for Maine to create a high-risk pool that subsidizes premiums for the highest cost individuals. This pool could be financed through a variety of sources, and at least 35 states have established similar mechanisms. This is not a new idea in Maine, and, in fact, Maine had a high-risk pool until the 1990s when it was abolished in favor of community rating and guaranteed issue. While there are many positive things that can be said about the current rules, there is little doubt that they also have led to a decrease in the number of health plans operating in the state.
Access to healthcare and coverage through health insurance are critical components of public health and must be protected. The regulatory environment must be shaped to maintain affordable healthcare access and is where the social and healthcare needs of the public must be integrated with the healthcare marketplace.
For instance, requiring Anthem to separate profit and losses in each of their insurance categories might prompt them to drop the individual market entirely, and requiring any insurer to offer insurance products in all (including individual) categories might further diminish the number of companies offering health insurance in our state. On the other hand, the institution of a high-risk pool would mitigate the impact of these changes.
The members of the Maine Medical Association urge the Superintendent of Insurance and indeed, all Maine policy makers, to examine Anthem’s request carefully and do what is right for the citizens of Maine. But ultimately, appropriate legislation must be crafted to balance these needs in a manner that is fair to all and which results in improved access to coverage.
The Superintendent of Insurance has scheduled a public hearing on the requested rate increase at 8 a.m. Tuesday, Oct. 24, in Room 126 of the Cross Office Building in Augusta. Interested persons may also provide written comments for the Superintendent’s consideration by sending them to 34 State House Station, Augusta, Maine 04333.
One thing is for certain. Maine citizens cannot afford to pay more for their health insurance than they make. The status quo is not sustainable. All Mainers have a stake in this and all should contribute to the debate and public dialogue.
William Strassberg, M.D., of Bar Harbor is president-elect of the Maine Medical Association.