Legislature adopts expensive health insurance mandate

Expensive requirement is most significant insurance action of the legislative session

While the Joint Standing Committee on Health Coverage and Insurance and Financial Services (HCIFS) may have had a busy second session overall, it was their action – and that of the full legislature in the closing weeks of the session – that will make the biggest difference to Maine businesses when it comes to future health insurance costs … and not in a good way.

The bill in question, LD 1539, An Act Provide Access to Fertility Care, sponsored by Rep. Colleen Madigan (D-Waterville), was submitted during the first session of the 130th Legislature in 2021 and carried over to this session. In the case of proposed coverage for mandated health insurance benefits, the Maine Bureau of Insurance (BOI) is required, unless bypassed by the legislature, to conduct a study on the impact of utilization and cost, in order to determine the impact of the proposal on health insurance premiums. The results of the BOI study can be found online through the Maine Department of Professional & Financial Regulation’s Bureau of Insurance (BOI). It estimates that costs will increase between $5.03 to $6.32 per member (insured) per month, without cost sharing, making it the costliest health insurance mandate enacted in this state in two decades. And to be clear, this mandate would apply to all individual, small group, and large group plans sold in Maine.

The Maine State Chamber testified against LD 1539 last session. We indicated to the committee that we recognized and were deeply sympathetic to the plight of those individuals who wish to have children but could not. We also acknowledged the clear benefit such a mandate would bring to these people. At the same time, we were deeply concerned it would raise the rates of others by socializing the cost across all insureds, whether they access this mandate or not. Because we believed this mandate held the potential for further increases in health care costs in Maine and the concerns businesses have regarding the existing cost of health insurance, the Maine State Chamber opposed the bill. Based on the bureau’s mandate study, it appeared our concerns were warranted.

The committee divided along party lines for the final committee version of the bill, with Democrats supporting and Republicans opposing. Because of the significant impact this bill will have on the insurance premiums of Maine’s small businesses, the Maine State Chamber immediately began a grassroots outreach effort to urge legislators to reject the bill, no matter how emotionally appealing it may be to support. Our efforts did receive some attention from the Governor’s office and an amendment was agreed upon between supporters of the bill and Governor Janet Mills. As amended, the bill did at least appear to put some – albeit minor – guardrails on the proposal.

As finally approved by the full legislature, the bill still represents a mandated benefit on all lines of health insurance except self-insureds. It allows health plans to impose “reasonable limits” on coverage; however, the limiting language remains very broad and dependent on rulemaking to be undertaken by the Maine Bureau of Insurance. Lastly, the effective date of the mandate was moved off to January 1, 2024.

So, what is the likely impact from the enactment of LD 1539? From a price perspective, the amendment is unlikely to reduce the cost of the mandate. There simply are not enough real guardrails or limitations to the proposal. Furthermore, passage of LD 1539 will likely reduce a portion of any savings associated with the merger of the individual and small group markets, which was recently announced by Governor Mills and the BOI and touted as bringing real savings, particularly to small businesses. At the request of the Mills administration, the BOI has been working on the merger of the markets for more than a year. According to the bureau, the savings from this merger could result in 6% decrease in the small group market in 2023, falling to 4% in 2024. LD 1539 will likely diminish those savings with premium increases potentially between 0.90% and 1.13%.

Passage of 1539 will further increase premiums in the individual market, over the already expected increase resulting from the merged market of 6% in 2023 and 8% in 2024. In plain English, employees and employers will pay more for health insurance.

LD 1539’s passage will also reduce the impact of the recently announced Small Business Rate Relief Program, implemented by Governor Mills and the BOI and designed to provide up to $40 million in direct premium reductions to both employees and employers. So, while this is a temporary relief program, LD 1539 creates a permanent increase.

Fertility, or infertility, mandates have been introduced many times over the years in the Statehouse, so it was only a matter of time before supporters were successful. While the mandated benefit will certainly assist certain individuals and families, the cost will be socialized so that everyone pays. The Maine State Chamber has consistently said that mandated benefits, no matter how well intentioned, serve no purpose if they push health insurance premiums beyond the reach of either the employer or the employee. Only time will tell how LD 1539 really affects costs.

On a more positive note, the HCIFS committee did reject LD 1463, An Act To Make Health Care Coverage More Affordable for Working Families and Small Businesses, sponsored by Rep. Denise Tepler (D-Topsham). This bill would have reinstated the repealed Affordable Care Act’s Health Insurance Tax at the state level. The tax would have caused rates to increase by 25%, which translates to $40 million in higher costs for the state. The tax was proposed to solve the “family glitch” issue in health insurance policies. The was initially a carryover bill in order to give lawmakers the opportunity to see what the Biden administration might do on a federal level regarding the “family glitch” issue. And in fact, the President has announced his intention to address this issue at the federal level, and therefore, the bill was decidedly unnecessary.

As has been the case for the past several years, health insurance policy has been tricky in the Maine Legislature. So much of what used to be debated at the state level is now governed and directed out of Washington, D.C., through the ACA. Policy changes, like the merging of the individual and small group markets, were driven by state agencies and did not necessarily need legislative approval.

What next session holds for health insurance and health care policy is unclear, but for many small businesses, the cost of providing coverage – no matter how much they may wish to do so for their employees – is steadily increasing and therefore impacting their ability to offer coverage. The legislature itself has failed to initiate or enact policy changes to turn this trend around. Instead, it has opted to increase costs through bills like LD 1539 – a disappointing outcome to say the least.

The Maine State Chamber of Commerce intends to remain engaged and involved in health insurance policy debates. While we cannot be sure what will be proposed in 2023, you can be sure something will, and we will be there so that the voices and concerns of Maine’s small businesses will be heard. For additional information or question, please contact Peter Gore by calling (207) 623-4568, ext. 107, or by emailing [email protected].