Maine Health Insurance Mess

I recently received a letter from Anthem Blue Cross and Blue Shield informing me that, beginning Jan 1, 2008, my premiums will jump a whopping 18.6%. I'm one of many Mainers that aren't covered by an employer health plan and have to purchase individual insurance out of my own pocket. My current plan carries a $5000 deductible and costs me $230/month. Starting Jan 1 I'll be paying $282/month. I also have an HSA account which helps a little bit.

So, since I'm paying all this money every month and pretty much getting nothing in return, I decided to investigate the current state of health care in Maine. The letter I received from Anthem blames the Maine State Government for the rate increase and directed me to a website for more information: www.FixInsuranceForME.com While I'm always a little skeptical about what insurance companies tell me, Anthem does make some good points. And it's certainly not inconceivable that the Maine Government could be at fault.

Anthem claims the problem with the Maine Health Insurance system is the result of outdated laws passed back in 1994. Specifically:

1. Guaranteed-Issue Law: This means that no one can be denied health insurance for any reason.

2. Community-Rating Law: This restricts what insurance companies can charge for premiums, regardless of the condition of the applicant. Sick members aren't charged much more than healthy ones.

As with most laws, the intentions were most likely honorable. Guaranteed Issue means insurance is available to everyone. Would it really be fair to deny someone insurance because they're sick? Same with Community Rating. Is it fair someone has to pay more for their insurance because they've been afflicted with a disease, etc?

In reality, however, these laws (at least in part) have degraded the Maine insurance market to the point where almost no one can afford private insurance. The high rates have caused many people to drop out of the insurance program. The ones who are left are generally the older and sicker people who simply have no choice but to keep participating. And those of us who are healthy and refuse to go without insurance are forced to carry an unfair percentage of the burden of the sick members in the risk pool. Of course, if the Maine Legislature had put a little thought into these laws before passing them, we probably wouldn't be in the mess we are. For example, The Guaranteed-Issue Law make me ask myself the following question: Being a 30+ healthy person, why shouldn't I just drop out of the program save the $300/month payment? I could buy that new big-screen TV I've been wanting, some good quality beer, maybe take a vacation, etc. Or maybe just bank the money. Ten+ years down the road when I get sick, I'll just rejoin (they can't deny me due to the Guaranteed-Issue Law) and start collecting benefits? Hmmmmmm. Of course, at that point it ceases to be Health Insurance and becomes Health Welfare.

I'm not really blaming the State of Maine for passing these laws. On the surface, they sound like a good idea. And many other states made the same mistake. The difference is that many other states have realized the error of their ways and FIXED the problem! But the Maine Legislature has done nothing as usual. They are fast to break things and painfully slow to fix them.

Here's some more reading on the subject:

http://www.downeast.com/Articles-2007/Maines-Insurance-Mess/