Data Says Maine Health Reform Working

Small businesses in Maine have seen continued improvement in the cost of their health insurance policies since Maine’s health reforms were implemented in 2011.

In the last three months of this year, one in four small employers saw their health insurance rates actually decrease when compared with one in ten during the last quarter of 2011.

And the bad news is less bad. The data from the Maine Bureau of Insurance shows that the number of small businesses receiving increases greater than 20 percent has been dramatically reduced. In the fourth quarter of 2011, 35.8 percent of small businesses received a rate increase of more than 20 percent. In the fourth quarter of 2013, only 10.1 percent had an increase greater than 20 percent.

Some of those increases may be due to changes in the size of the workforce. If an employer downsizes the workforce, rates may rise as the spread of risk for that employer has changed. Also, medical inflation continues to hit us all right in the paycheck.

The good results are being spread fairly evenly across the state. In Northern Maine, a third of all small businesses saw their rates drop while in Western Maine rates dropped for 20.7 percent of employers.

What’s driving the change? Maine’s health care reform has three main components:

1) Insurance companies can now use age as a pricing factor. The older we get, the more we need health services. In fact, a 60 year old spends four times more for health services than a 20 year old. The new rates more accurately reflect the individual’s cost of insurance.

2) Insurers may also use geographic location in pricing their policies. Some areas of the state charge more for health services than others, something that was prohibited pre-reform.

3) Also pre-reform, the law encouraged patients to remain in their community for health services even if lower cost services were available further away. Today, insurers and employers can encourage patients to travel further for their most expensive procedures and may offer incentives to do so. Data indicates that not only is the cost lower but that quality of outcome improves with hospitals and doctors who perform hundreds of complicated procedures annually instead of just a few.

What can be done to continue this positive trend?

Prevention: A focus on wellness (preventive care, diet & exercise) can decrease the amount of health services purchased during the course of the year. Catching and preventing chronic diseases such as diabetes and heart disease really change the cost equation.

Utilization: Taking charge of your health makes a difference. Using your doctor instead of the emergency room for non-emergency care is a difference of hundreds of dollars in costs. Questioning your doctor about tests and expected value can also lead to less testing which saves a lot of money.

Funding: Redesigning health plans to create options can allow participants to save the money they don’t spend. It gives them an incentive to choose wisely. For example, using a health savings account (HSA) that is funded with pre-tax dollars by the employer and employee can be as big or bigger than an annual raise. When individuals can save their own money, they often make different choices.

Maine’s health reform is working and health consumers can make it even more successful by exploring their options and living healthy lifestyles.