The Rate Hike Law: Hurting Small Business

Sometimes being right is a bad thing. In the spring of 2011 we lobbied, testified, and protested against the passage of what is now known as the health care rate hike bill (LD 1333). MPA, along with several other advocacy groups, believed that this law, now on the books as Public Law 90, would be harmful to many Mainers, including small business owners, older people, people living in rural Maine and people who work in dangerous jobs like fisherman, loggers, and farmers. The law passed even though many of the Republican legislators who voted for it had never read the bill.

The rate hike law follows the Republican principle that a free market system works when there is as little government intervention as possible. This may be true in some industries, but it has proven not to work for health insurance. We all agree that there is a health care crisis in our country; the question is how do we fix it? The private, for - profit health insurance companies have proven again and again that they will put profits before people especially if unregulated.

The debate around the passage of the rate hike bill recognized that insurance is too expensive for most people, and that rising cost of insurance is of major concern for the people and small businesses of our state. Instead of holding greedy insurance companies responsible for rising costs, inhumane practices, and outrageous profit margins, the rate hike law gave insurance companies more opportunity to increase rates and rake in profits.

A report recently released by Consumers for Affordable Health Care took a closer look at what the supporters of the rate hike bill promised, and what has actually happened. According to the report, and from the stories we have been hearing from small business owners and Mainers across the state, we are sorry to say our predictions were right. Rates are going up for Maine people and insurance companies are lining their pockets with profits.

Insurance companies can now raise rates on older or rural customers far more than before. Maine is one of the oldest and most rural states in the country, which means that this new law leads to higher rates for most people. In fact, the report shows that in the last two years the majority of individuals who have Anthem policies (the largest insurer in Maine) saw their rates increase. And 91% of policy holders ages 55-59 saw an increase. If you are over 60 and an Anthem policyholder, you definitely got an increase of 18% or more.

This provision also means bad news for small business owners. More than 90% of small businesses in Northern, Eastern, Central, and Western Maine saw their rates go up, many of them by more than 20%. Southern Maine is doing somewhat better, but 84% of small business in southern Maine still saw a rate increase.

A tricky part of the law is that it allows companies to stop selling the policies they currently sell, and create and sell new policies with less coverage and benefits. So far Anthem is the only company that has taken advantage of this aspect of the law. They replaced an old policy with a new one that offers much less coverage with much higher deductibles. The new policy, called Health Choice Plus, does not cover maternity, there is a $1,000 deductible for prescriptions, and mental health services are cut as well.

The last two areas of the law that are included in the report affect every single policy holder in the state: the law created a new tax on every insured person, and weakened rate review. With the rate hike law, every privately insured person in Maine is now required to pay up to $4 a month, or up to $6 a month if the $4 isn’t enough. The money will fund a new private, nonprofit corporation that will use the money to reimburse insurance companies for the cost of covering higher risk policyholders. This new organization is not part of our government, which means there will be no public meetings or transparency about how it operates and spends our money.

Perhaps one of the worst parts of the rate hike law is that it weakens our rate review process. For the past several years, Maine individual policy holders have had the opportunity to attend a public meeting and give testimony before Anthem was allowed to raise its rates. After the public hearings our Bureau of Insurance looked carefully at Anthem’s request and how much Maine people could afford. Each time the Bureau of Insurance decided that Anthem was asking for a rate increase that was way too high, without this oversight, over $2 million dollars more would have been paid by Mainers to Anthem’s profit line alone. This year Anthem took advantage of this new freedom and raised their rates to earn $1.8 million in profits, even after receiving $11 million from the new tax we all paid.

Republicans in the legislature might have thought that they could pass this rate hike law under the radar, but MPA is working hard with our partners to bring stories about the impact of the law to light. Together we will keep the pressure on legislators who voted for insurance companies instead of their constituents and support legislators and candidates who will put people before profits in the State House.