By Christy Roix Daggett, originally published in the Bangor Daily News on May 1, 2013
The Maine Legislature is considering several bills designed to chip away at Public Law 90. This 2010 law, passed by the then-Republican majority after a rushed review and compressed debate, deregulated the small group and individual health insurance markets, and it subsidized private insurers through a fee levied on all insured people in the state.
Inspired by a similar deregulation effort in Idaho, the bill’s sponsor, then- Rep. Jon McKane, R-Newcastle, said, “[The] 60-year-old in Idaho is paying the same amount as a 20-year-old in Maine. If that doesn’t say we should do something, I don’t know what will.”
So why is the Legislature now contemplating the repeal of central components of PL 90? Are we moving closer to the Idaho model, as predicted? Indeed, we are. Insurance premiums are cheaper for some. For others, especially rural Mainers, premiums are skyrocketing, putting health coverage out of reach.
According to the Kaiser Family Foundation, in 2011, 10 percent of Mainers were uninsured, while 18 percent of people in Idaho were. By August of last year, about 21 percent of people in Idaho were uninsured. But rates of health care coverage are not equal across Idaho: Rural and remote counties are driving the problem. In remote and rural Clark and Owyhee counties, for instance, 32 percent of residents have no health insurance.
This rural-urban divide unveils PL 90’s flaw: It reduces rates for a few by jacking up rates for others. Maine is the most rural state in the nation and also the oldest. This is no surprise, as the economic policies of the past 40 years have spurred a migration out of rural America, leaving the oldest behind. Before PL 90, Maine protected rural residents by imposing “rating bands” on private insurers. This meant that the oldest rural customers could not be charged premiums more than 1.5 times what a young urban resident would pay for the same policy. So, if a base premium was $300, an older Mainer would pay $450.
Since PL 90, the age factor is 3-to-1, the geographic factor is 1.5-to-1 and the tobacco-use factor is 1.5-to-1. But in yet another departure from the past, these factors can be piled on top of each other rather than combined. Now, if the lowest premium rate available to a young nonsmoker in Cumberland County is $300 per month, the highest monthly premium for an older smoker in Aroostook County can be a staggering $2,025 per month. For some perspective, annual per capita income in Aroostook is $20,659 — or $1,721 a month.
What PL 90 allows private corporations to do is “cherry-pick” the healthiest customers — young and urban Mainers — by offering tantalizingly low rates. At the same time, companies can unload the old, sick and rural by spiking their rates to unaffordable levels.
Since PL 90’s enactment, premium rates increased for the majority of all small businesses but most dramatically in northern and eastern Maine. In the fourth quarter of 2012, the Maine Bureau of Insurance reported that almost 87 percent of small group policyholders in northern Maine faced a rate increase — some as high as 80 percent. Not surprisingly, the Maine Bureau of Insurance also reported that small group renewals are decreasing. People cannot afford to renew their insurance. The percentage of uninsured in Maine has increased since the passage of PL 90: By October 2012, 11.5 percent of Mainers were uninsured.
PL 90 also shrank the state’s role in overseeing rate increases in the individual market and created a “high-risk pool” via a $4-per-month tax on all insured people in Maine. This tax is handed over to private insurers, to reimburse them for care they provide to people they identify as “high-risk”: $22 million annually. Did this reduce premiums, as predicted? Only for a few, as we have seen.
Did it result in newer, cheaper products entering the market, as PL 90’s champions predicted? Anthem offers a new product, Health Choice Plus, which sets up a maze of hefty deductibles for in-network care, out-of-network care and prescriptions, and eliminates maternity benefits — yet another tool to keep costs down by squeezing out expensive people (that is, women of childbearing age).
What, then, should our representatives do to ensure that rural Mainers can still afford health insurance? We can say that we have tried deregulation, just as the federal government experimented pre-2008 with deregulating the giant banks. We can say that our experiment is complete. The result is plain to see in the evidence of staggering rate hikes and reduced policy renewals.
The optimal fate for PL 90 would be complete repeal, but this is unlikely to survive Gov. Paul LePage’s veto pen. Surely, as the most rural state, we should ensure that our rural and older residents are protected against rate increases, both by reinstating reasonable ratings bands and ensuring public oversight. The $4 monthly tax should no longer be handed over to private companies without oversight.
So, yes, we are following the Idaho model, to a place where old, rural Mainers will be much more likely to be uninsured. Is this good public policy?
Isn’t the role of insurance to spread risk across a population, not concentrate costs among the oldest and the sickest among us? After all, as my Ashland-born grandfather used to intone, “Old age comes to us all.”
Let us once again show leadership to craft a path for Maine that honors our unique rural spirit and is fair and humane to the oldest and most vulnerable among us. My grandfather’s wisdom should humble the most ardent proponent of deregulation: It is an inescapable part of the human condition that someday you will age and become frail.
Christy Roix Daggett is a Presque Isle native and a graduate student in public policy at the Edmund S. Muskie School of Public Service at USM. She is a graduate fellow of the Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications.