By Alice Dubenetsky
As the state of Vermont engages in a headlong rush to dismantle it’s system of health care delivery, warning bells are going off in many corners. Last week, a forum on the future of health care in Vermont was hosted by the on-line magazine Vermont Tiger, Vermonters for Health Care Reform, True North Reports and the Ethan Allen Institute. The overarching message conveyed by nearly all of the participants was that Green Mountain Care, and the federal Affordable Care Act, spell economic disaster for Vermont.
The forum’s first speaker was Joel Allumbaugh, Director of the Center for Health Reform Initiatives, and a member of the Maine Heritage Policy Center, and CEO of National Worksite Benefit Group, detailed the efforts that Maine’s “trifecta” of Republicans been making in an effort to turn around Maine’s failing health care “reforms”.
In 2010 Maine had the highest health insurance premium in the nation, according to Allumbaugh. In an analysis in the Sun Journal, he placed the responsibility squarely on the state’s Democratic-controlled legislature, and it’s “tendency to legislate in a vacuum” without considering the long-term consequences.
Like Vermont, Maine passed guaranteed issue and community rating laws in the 1990’s, with the hopeful but misguided notion that the changes would bring high rates for elderly people down, while bringing lower rates up – a “meet in the middle” approach. The law stipulated that no one could be denied health insurance on the basis of physical condition. Along with guaranteed issue, Maine also passed a community rating law, limiting the amount a carrier can charge for a policy regardless of a person’s health or life style. This legislation left insurance companies with the choice of either accepting high-risk individuals or moving their business out of the state, which nearly all insurance carriers did, leaving Mainers with only Anthem Blue Cross and Blue Shield to cover 97 percent of the residents. In addition, Maine had no mandate for participation, so as rates rose for the younger market, those people chose not to purchase insurance, while older, sicker people remained in the pool, a situation Allumbaugh described as a “death spiral”. After more than six years and a cost to taxpayers of $183 million, there were more uninsured Mainers in 2009 than in 2003.
In 2011, Maine’s newly elected Republican Governor, Paul LePage, signed LD 1333 “An Act to Modify Rating Practices for Individual and Small Group Health Insurance Plans and to Encourage Value-Based Purchasing of Health Care Services” into law.
LD 1333 reforms but does not eliminate Guaranteed Issue. Under the new system, applicants for individual insurance complete a health questionnaire, the answers to which trigger a decision on whether they are eligible for the Guaranteed Access Plan (GAP) a funding mechanism to cover people with higher medical costs. Under the GAP the carrier contributes a certain percentage of the premium to the GAP, but may later submit for reimbursement over a certain threshold.
LD 1333 also repealed Rules 850 and 750, rules that are unique to Maine and required carriers to have a network providers located within certain driving distance of people’s homes. Allumbaugh explains, in an essay published for the Maine Heritage Policy Center; “In a rural state like Maine, specialists are often not available within certain distances of many residents, resulting in carriers having to pay charges as billed, whatever those charges are. This results in little negotiating power with specialists. Carriers in other states often incentivize policyholders to see high quality, lower cost providers by offering tiered networks.” Interestingly, Maine’s state government workers were exempt for Rule 850.
Rule 750 required insurers to offer certain mandated plans that were so expensive that almost no individuals purchased them. Repeal of Rule 750 allowed insurers to reduce the administrative costs associated with maintaining these plans.
There are other cost containment obstacles, many of which can be found nationwide. One very large problem, according to Allumbaugh, is the medical billing system, which does not itemize cost for service, so patients have virtually no idea what they are paying for care, procedures or medicines. Allumbaugh referenced Lasik eye surgery and infertility treatments as two examples of patient-based cost containment. Patients opting for these procedures and treatments are given the cost up-front, and make decisions based on affordability. With the current construct of the 3rd party billing system, no one is actively watching individual costs. Allumbaugh said he hopes itemized billing will become standard procedure in the future.
Other provisions that will lower health care costs, said Allumbaugh, are cross-border shopping, allowing Health Maintenance Organizations to charge a higher deductible than $1,000, and expanding bridge policies, such as a recent graduate might purchase, to 24 months.
Allowing the insurance market to function in the free market, connecting patients to the cost of their care, creating incentives for improved health and personal responsibility, and an initiative to pay for quality care rather than volume are all ways to start bending the cost curve of health care down and thus the cost of health insurance.