Editor’s note: This op-ed is by Jeff Wennberg, the executive director of Vermonters for Health Care Freedom.
With all the focus in the Legislature on H. 559, the exchange bill, we thought it would be helpful to illustrate what is wrong with Vermont’s approach by contrasting it with another state. The state of Maine has embraced the exchange in a way that, if followed here, could provide significant benefits in expanded access and lower cost, as well as substantial secondary benefits for young families and the overall economy. Maine’s reform law is called LD 1333.
Maine and Vermont adopted very similar reforms in the 1990s in response to concerns for insurance company “cherry picking” and escalating premiums for seniors. “Community rating” requirements leveled premiums across age groups – increasing costs for younger, healthier individuals and lowering them for seniors. “Guaranteed issue” eliminated the practice of cherry picking by requiring carriers to take all applicants regardless of pre-existing conditions. The effect of these and other reforms was to give Maine one of the costliest insurance markets in the nation, and to increase the ranks of the uninsured among young healthy individuals who simply cannot afford the premiums.
Then, in 2003, Maine made an attempt at universal insurance coverage called Dirigo Health. Plagued by funding fights in the Legislature, Dirigo never came close to serving the predicted 180,000 Mainers by 2009, and was broadly seen as an expensive failure. Partially as a result, in 2010 Maine voters replaced the Democrat-controlled House and Senate with strong Republican majorities and elected a Tea Party Republican governor, Paul LePage, who promised repeal of Dirigo.
With the passage of Obamacare, Maine’s new majority leadership thoughtfully considered their options under the required exchange and also incorporated contingency plans should the Affordable Care Act be struck down by the courts or repealed. In a nutshell, Maine did three things in implementing their exchange in 2011 that will lower their costs and increase access to insurance.
First, they reformed guaranteed issue, which had reduced the insured pool as younger people dropped insurance with increasing premium cost. Maine borrowed an idea from Idaho and created a broad-based government-funded reinsurance system called the Guaranteed Access Plan (GAP). GAP covers the cost of care for high-utilization individuals, thereby reducing premiums for everyone.
Second, they reformed the community rating system to allow insurers greater latitude in rating age groups. This means that the premiums charged to younger individuals can more closely reflect the actual cost of insuring them. Community rating is still required (a condition of the ACA), but the rules are relaxed. By reducing premium costs to healthy individuals, Maine expects more of them to enroll, which will result in increased revenues from a population that demands few services. This, in turn, will help fund services to seniors, mitigating or eliminating premium increases to this group.
Third, Maine has moved to dramatically increase competition in the health insurance market by allowing Mainers to purchase plans across state lines. LD 1333 allows individuals to purchase health insurance plans offered in New Hampshire, Massachusetts, Rhode Island or Connecticut. The ACA will establish national “minimal essential benefits” and consistent rating practices by 2014, and Maine will use this standardization to dramatically increase consumer choice and competition in their market.
Contrast this approach with H. 559 in Vermont, which will reduce consumer choice, increase costs for many which will lead to more people being uninsured, and rather than expand access to private insurance plans beyond our borders, H. 559 will outlaw private insurance within Vermont that is not offered through the government-controlled exchange.
The Maine Heritage Policy Center has an excellent article explaining that state’s approach to the exchange, which is recommended reading for Vermonters seeking a practical alternative to Vermont’s march to government-monopoly single-payer health care.
The article is available here.
