Is Maine’s Health Reform Working for Most Small Employers?

Small employers in Maine have been receiving mixed messages in the media about the changing cost of group health insurance. Based on recent news reports, there are many different interpretations of the same data.

What is clear from the data on the Bureau of Insurance web site is that Maine’s health reform (Public Law 90)has provided the vast majority of small employers modest to significant savings compared to the historic rate of increases experienced prior to the law being passed.

For example, the number of employers receiving an actual rate decrease tripled from the prior year since the law became effective. In 2010-2011, there were 309 employers receiving rate decreases. A year later,there were 973 employers seeing their health insurance costs actually drop.Similarly, those receiving rate increases saw more modest changes than the prior year. Overall, 1,758 more businesses received lower rates following implementation of the law while the number of businesses seeing increases greater than 40% rose by 207.

The reform is working as intended and the number of winners exceeds the number of losers. There is no question, however, that some employers are being hard hit by the changes. The reason is that under prior Maine law, rates were devised in a way that subsidized older and rural employees.The fact is that delivering health care in rural areas to older and sicker people is more expensive. With a decreasing and aging population in many regions, that cost continues to climb.

The ripple effect of higher rates in rural regions may also compel health care providers to rethink their delivery models. One smaller coastal hospital recently decided to close its emergency room services and,instead, serve as a clinic during normal business hours. Critical care will be rendered by a regional hospital.

Other regions of the state, such as Aroostook County, have multiple hospitals in spite of dramatic losses in population. Fort Kent,Houlton, Presque Isle and Caribou all have full service hospitals yet the county has lost more than 36,000 residents since its hay day in the 1960s. It is hard to imagine that one or more of those institutions soon will have to modify how they do business.

The Maine health reform also included repeal of Rule 850, a provision that set travel restrictions on patients. The result was that hospitals and doctors in rural areas could charge rates that were higher than lower cost providers in more densely populated areas (e.g. Bangor, Lewiston,Portland). When this one-of-a-kind provision is removed, rural providers may end up negotiating fees rather than lose the business to other health care providers.

No matter where you live, state and federal health reform will change the cost and delivery of health care – hopefully for the overall betterment of the economy and long term well-being of our citizens.