What happened in Maine is a sobering reality check on the oft-repeated myth that getting rid of ObamaCare and other consumer protections is the answer to our health care problems. If the government will just get out of the way, the myth-makers would have us believe, the free market will magically transform our dysfunctional health care systems into one of the world’s very best.
The voters in Maine fell for magical thinking in 2010 when they turned over control of the legislature and governor’s office to candidates who promised to block ObamaCare and implement what they called “common sense” free-market solutions. Once they did, they assured voters, insurance premiums would fall and more people would have access to affordable care.
Sure enough, soon after being sworn in, lawmakers passed legislation that in many ways took Maine in the opposite direction of where President Obama wanted to go. When newly elected Republican Governor Paul LePage signed the bill into law —a bill enthusiastically endorsed by insurance companies — many consumer protections enacted over two decades disappeared. Especially hard hit: people living in rural areas and folks over 40.
Among other things, the new law abolished protections for rural families that had required insurers to have at least one doctor in their provider networks within 30 miles of where those families lived and at least one hospital within 60 miles. The law also allows insurance companies to effectively double rates for older residents. That provision is affecting not only individuals and families, but also small businesses that employ older workers. Within months of the bill’s passage, insurers began jacking up the rates they charged businesses with older workers by 90 percent or more.
Even so, backers of the new law continued to insist that after it had been in effect for awhile, the measure would help a majority of Mainers.
But those promises have turned out to be empty, as Consumers for Affordable Health Care, a statewide advocacy group, found following a review of company reports filed with the Maine Bureau of Insurance since the law was enacted. What they found should dash the hopes of even the most ardent free-market supporters.
The group found that more than half of individual policyholders saw their rates go up, not down. It was even worse for small businesses: 90 percent of them got rate increases instead of decreases. And, as consumer advocates had feared, hardest hit were indeed older workers and people living in rural areas, most of whom saw good coverage options previously available to them disappear.
In response to the group’s report, backers of the law said they still expect rates will eventually go down for many people as more young folks start buying policies. Their optimism is based on the theory that as insurers charge older people more, they can charge younger people less. If the theory holds, previously uninsured young people will begin signing up for coverage in droves. Once that happens, the pool of insured residents will increase and insurers, being good corporate citizens, will then lower premiums for everybody else.
The problem is that, in the absence of subsidies and a requirement that they buy insurance, some young people are still deciding to remain uninsured. Not so much because they want to be uninsured, but because they just don’t make enough money to pay for health insurance on their own. And many who do consider buying a policy undoubtedly are being turned off by just how inadequate the policies with relatively low premiums really are. Most of the policies marketed to young people have either limited benefits or very high deductibles — or both — meaning that they do not represent good value for consumers. What they do represent are big profits for insurance firms.
As Joseph Ditré, executive director of Consumers for Affordable Health Care, said, "The promise of new young, healthy uninsureds returning to the health insurance market and thereby lowering prices for everyone is just not happening.”
And small businesses are not seeing better deals, either, as a result of the law. On the contrary, insurance companies are raising premiums on small businesses in all geographic areas, not just in remote areas. Especially hard hit are businesses with older workers.
Ditré worries that because of the sharp premium increases that are going into effect throughout the state, not only will the number of uninsured Mainers increase but those who are most likely to drop their coverage as it becomes increasingly unaffordable are those who need it most: older people.
So much for magical thinking and the fantastical free-market ideas to fix health care.
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