A healthier Maine | New health insurance reforms a positive step for Maine businesses
LD 1333, the health insurance reforms signed into law by Gov. Paul LePage on May 17, goes a long way toward increasing health coverage options and reducing premiums in Maine. The reforms also create new opportunities for more businesses to offer their employees quality, affordable care.
There has been a lot of talk since the passage of LD 1333 that insurance reforms are the equivalent of rearranging the deck chairs on the Titanic. The argument is that the underlying cost of health care continues to sink us and will eventually wash away any short-term gains achieved by reform.
To some extent, there is an important point in this argument, that the true cost drivers affecting our insurance premiums are the costs of health care. However, LD 1333 remains an important and positive step for Maine. Maine’s insurance regulations have been the equivalent of throwing the Titanic deck chairs in a pile and setting them ablaze. It is true that the hole in the hull is the biggest challenge before us, but until that burning pile of insurance regulations is extinguished, our efforts to drive down the cost of care are fruitless and our ship will continue to sink.
Health insurance and health care are two very different things operating on very different principles. Maine has consistently attempted to solve its health care challenges through insurance regulations and the consequences have been catastrophic. Maine’s individual insurance market has been spiraling downward with fewer people affording coverage each year while costs continue to escalate. We attempted to moderate costs for older applicants with our community rating laws but instead chased young applicants out of the market in droves. With fewer people in the market among whom to spread costs, everyone remaining in the market, young and old alike, are paying higher premiums.
Breaking it down
LD 1333 substantially improves the individual insurance market in Maine by removing the impact of some of the largest claim expenses from an individual’s insurance premiums. It also allows more rating flexibility aimed at reducing rates for younger policyholders to encourage them to purchase. This will increase the number of people sharing in the costs, reducing premiums for everyone. This could also be a real advantage for very small employers whose group insurance rates are high by creating affordable individual coverage options.
The new law also makes several important changes designed to improve coverage options for businesses offering health insurance to employees. For example, LD 1333 allows insurers the opportunity to offer businesses more affordable insurance options by removing the limit of $1,000 deductibles for HMO plans.
Businesses may also have the opportunity to lower premiums by offering incentives to employees to see designated physicians providing high-quality care at more affordable prices. This is a benefit state government employees and legislators currently enjoy that LD 1333 finally extends to all Maine companies.
LD 1333 also creates a wellness credit for small businesses with 20 or fewer employees. A business owner who invests in health education programs, nutrition classes, stress management, smoking cessation program or incentive awards for employees who engage in regular physical activity is eligible for an annual tax credit of $100 per participating employee, or $2,000, whichever is less. This small business wellness credit goes a long way toward promoting a healthy work force. Employees participating in these programs and activities will see increased output, fewer sick days and a better quality of life — all of which can improve a business’ productivity and bottom line.
In addition, the law allows captives, an insurance structure for certain groups or associations, to offer health coverage. You often hear business groups or certain industries express interest in banding together to manage health care costs. This creates a vehicle for that to happen.
The real advantage for the business community is the opportunity for innovation. For example, one group currently interested in utilizing this new captive opportunity intends to promote a strong wellness culture and work with primary care physicians to create payment models that reward doctors for patient outcomes and satisfaction. A system that aligns incentives for both patients and doctors to focus on maintaining good health could have positive implications throughout our health care community.
LD 1333 is a historic change that answers the calls for real and affordable health insurance reform that have been made for years. This law helps businesses offer their employees stronger benefits at a much lower cost, expands coverage options for businesses and individuals, and reduces health coverage costs throughout Maine — and it’s about time.
Joel Allumbaugh, director of the Center for Health Reform Initiatives at The Maine Heritage Policy Center, can be reached at jallumbaugh@mainepolicy.org. Read more Public Engagement here.
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