IFS committee hears Governor Mill’s health care reform bill

Proposal focuses on lowering cost for small businesses
 
The Joint Standing Committee on Health Coverage and Insurance and Financial Services (HCIFS) held a public hearing on Wednesday, February 5, 2020, on Governor Janet Mill’s signature bill – LD 2007, The Made for Maine Health Coverage Act. The legislation is designed to lower the cost of health insurance for Maine small businesses.

Sponsored by Speaker of the House Sara Gideon (D-Freeport) and co-sponsored by Senate President Troy Jackson (D-Aroostook), the bill received a long public hearing – with some proponents, very few opponents, and a predominant number of witnesses, including the Maine State Chamber of Commerce, who took a neutral position on the bill. While there may be merit in the Governor’s proposal, there remain far too many unknowns and unanswered questions before the employer community can get behind the proposed changes.
      
As drafted, the bill:
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• Requires health plans to cover the first primary care visit and behavioral health visit each year for free – with no deductible and no out-of-pocket costs, making some of the most common health care visits less costly. Additionally, under the bill, the second and third primary care and behavioral health visits could have a co-pay, but the deductibles would not apply;
  
• Proposes in a key section of the bill the merging of the small group and individual markets in Maine, creating a combined, larger pool of enrollees – one that supporters say will be more stable and therefore may help mitigate premium increases. Insurers would then be able to determine premiums based on this larger pool and offer the same plans to both individuals and small businesses, thereby helping small businesses to get a handle on health care costs;
• Extends reinsurance for the first time to small businesses, funded by the federal government and current fees in Maine Guaranteed Access Reinsurance Association (MGARA), the quasi-state agency which administers and funds the reinsurance program for the individual market and would also administer the extended reinsurance for the small group market once merged. In the bill’s single cost control measure, it would allow insurance companies leverage to negotiate prices with health providers by limiting the amount the program pays for reinsurance for certain high-priced services to no more than twice what Medicare pays for certain high-priced services (200%);
• Creates a state-based Marketplace run by the State of Maine and starting in the fall of 2020, using the federal website, HealthCare.gov, and related services. Maine would conduct its own education, in-person consumer assistance, and outreach on coverage;
• Transitions from HealthCare.gov to a fully state-run system – operating our own website and call center – if an evaluation of benefits and feasibility of doing so show that this is the best path forward for Maine; and,
• Indicates that funding for the Marketplace would come from existing user fees on insurance companies, no higher than what the insurance companies pay now.

In testimony before the committee, Maine State Chamber’s Executive Vice President, Peter Gore, indicated that the Chamber was appreciative of the Governor’s attempt to address one the of the longest-standing business challenges – the cost of health insurance – for any small employer operating in Maine. While Gore indicated that the Maine State Chamber was supportive of the change in the Marketplace moving to a state-based exchange, too much remained unknown at this point in the discussion to be able to support or oppose the rest of the bill.

While acknowledging that the intent of the bill was to lower costs, without actuarial information regarding the merging of the individual and small group markets, it is impossible to know whether the proposal would help or hurt small businesses at this point. Furthermore, Gore indicated that it was likely that there would be winners and losers should such a merging take place. Knowing how this played out in both markets would be critical before and final decisions should be made.

In addition, the keystone to the entire proposal – extending the scope of the existing reinsurance fund from the individual market to include the small group (business) market – is dependent on procuring what is known as “Section 1332 Waiver” monies from the federal government. This is extremely important – not only for the success of the proposal and the individuals and employers affected by the fund, but also large employers who are not.

Currently, the MGARA is funded by an assessment of $4 per member per month on all ratepayer premiums.  So not only are individuals currently charged the assessment, but businesses in the small, large and self-insured groups (through their third-party administrators) are as well. The bill does not call for an extended assessment, but in his testimony, Gore expressed this concern for many large employers. What will be the result if the “1332 Waiver” monies come in at a lower-than-expected amount, or not at all, or if the reinsurance mechanism funding is overall inadequate to meet the needs of adding the small group market? As indicated, despite not being able to access or benefit from the MGARA reinsurance, larger employers are still required to pay the assessment to fund the program. This results in millions of dollars in cost in some cases. All while some of these larger employers are struggling to control and pay for their own higher health insurance.

Despite the fact that LD 2007 contains built-in triggers that would cause the bill to stop should costs increase as a result of its passage, or if the federal reinsurance monies do not materialize, there is concern among this section of the employer community that programmatically and politically it would be difficult to abandon the entire premise. Therefore, it could open those employers up to the possibility of an even higher assessment. The administration has indicated they would not support such an action; however, the possibility exists.

Currently, the committee plans to work the proposal in the coming weeks. We will continue to follow this bill closely and keep members informed of its developments. For questions or additional information, please contact Peter Gore by calling (207) 623-4568, ext. 107, or by emailing [email protected].