Strategies & Limitations on Fixing Maine's Health Insurance System

Strategies and Limitations on Fixing the Insurance System

There are two broad policy perspectives that underscore efforts to reduce these costs through Maine's insurance system. The irst advocates for a single, broad-based insurance program. This approach would eliminate the ineficiencies and disparities that exist in a fragmented insurance market. This approach advocates for a single risk pool that insures all persons at the same premium cost (i.e., "community rating"). It is important to note that a "single" payer system is not the same as nationalized health insurance. Doctors and hospitals would continue to be private enterprises and consumers would continue to access the doctor and hospital of their choice. A single payer system currently exists in the United States: Medicare provides coverage to all eligible elderly and disabled consumers through a single insurance pool. Medicare is administered through different insurance companies and consumers can almost always access the doctor or hospital of their choice.

While a single insurance pool may be appealing, it would be nearly impossible for a state to adopt this reform. The federal government's authority extends over Medicare, a large part of Medicaid, and self-insured groups through ERISA. While a state could require the pooling of all insured populations within its regulatory authority, a decline in one population's premium means an increase for another. For example, it has been suggested that Maine require small groups and individuals to be pooled together. This would likely result in a lower cost to individuals but a higher cost to small groups which might cause more small groups to discontinue their health insurance program or attempt to self-insure.

The second often touted approach is one of deregulating Maine's insurance markets. For example, it is estimated that Maine's mandated beneits contribute from 4 to 6 percent to the annual premium for groups of 20 or fewer employees and approximately 8 percent for groups of more than 20 employees. Many of these mandates, such as mammography, have become standardized beneits among both insured and self-insured plans. These beneits are not likely to be removed from beneit plans and therefore savings opportunities may be less than expected.

While many states, including Maine, have initiated health reform, Massachusetts' recent effort has been particularly noteworthy in attempting to address underlying structural issues around insurance.

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