From President Obama to the president of the Maine Senate, elected officials are focused on insurance premium rate hikes.
Anthem and MEGA Life and Health Insurance seek increases as high as 23 percent, catching the ire of Maine lawmakers and policyholders alike. Rate hikes are also proposed for policyholders in other states, with Michigan bracing for a proposed 56 percent rate increase.
“Over the past decade Anthem has asked for, and received, nine double digit rate increases while enjoying steady profits almost every year,” Maine Senate President Elizabeth Mitchell (D-Vassalboro) testified before the Bureau of Insurance Feb. 22.
She cited Mainers who pay more than $6000 per year for annual premiums, yet who face a $7000 annual deductible. Few seek medical coverage approaching deductible levels, which Sen. Mitchell says equates to paying more than $13,000 in annual medical costs before an insurance company begins to pay.
“Having no health insurance is bad. Paying thousands of dollars for no health insurance is even worse,” Mitchell said.
Her words resonate in the foundation of another bill making its way through the Maine Legislature. While Mitchell is focused on premium hikes and imposing caps, others are set on ensuring insurance companies can’t cap coverage when it’s needed most.
LD 1620, sponsored by Rep. Seth Berry (D-Bowdoinham), is “An Act to Protect Health Care Consumers from Catastrophic Medical Debt.” Rep. Berry seeks to insure insurance lives up to its name.
“‘Major medical’ implies you will be covered for major medical and insurance should mean insurance,” he said of his wish to remove benefit caps on major medical insurance policies sold in Maine.
Benefit limits are becoming more common in Maine. Before Jan. 1, 79 percent of Anthem’s large group policies and 28 percent of small group policies did not carry lifetime limits. However, that policy changed when contracts were amended to cap lifetime limits to $3 million for major medical expenses.
“When I first heard about lifetime and annual benefit caps on insurance I was horrified, especially in these economic times,” Rep. Berry said. “That some health insurers were increasing their profits by abandoning people who most needed coverage and who had paid for it – for their entire working lives, in some cases – was astounding.”
For someone suffering a chronic illness, or the results of an accident, $3 million in benefits can be exhausted in a matter of months or a few years, according to the nonprofit organization Consumers for Affordable Health Care, based in Augusta.
For at least 33 policyholders over the past 10 years, insurance ceilings have been reached during times of medical crisis.
The Maine Bureau of Insurance conducted a survey of five health groups selling coverage in Maine. Anthem, Aetna, Cigna, Harvard, Pilgrim and MEGA were each asked to record how many insurance customers had exhausted benefits when faced with catastrophic illness.
Chronic diseases and accidents caused at least 33 policyholders to exhaust lifetime benefit caps of $3 million or less on insurance policies.
The caps are as diverse as the illnesses for which coverage was sought. Treatment for chronic heart failure, breast cancer, melanoma, diabetes, other chronic illness and accidental injury helped exhaust benefits.
Overall, the study found that annual and lifetime limits, with the exception of policies offered by MEGA and Anthem, were “relatively rare.”
For instance, in 10 years, 26 Anthem policyholders exhausted caps ranging from $20,000 to $3 million. Eight MEGA customers have exhausted annual caps between $10,000 and $500,000.
In all the study found some 48 percent of MEGA policyholders have $1,000,000 lifetime insurance caps per injury or sickness; 33 percent of MEGA customers have $2,000,000 cap. In addition, 59 percent of MEGA policyholders in Maine have a $500,000 annual medical benefit limit.
According to the report, MEGA estimates premium increases of one or two percent to remove the limits.
Given the limited number of Mainer’s with benefit caps, and lack of initial response from insurance companies, Rep. Berry did not anticipate much resistance to LD 1620.
The bill would have minimum impact on insurance companies but immeasurable impact on the policyholders who face bankruptcy due to catastrophic illness or accidents, he said.
“It’s the right thing to do and it’s attainable,” Rep. Berry said.
Last week the bill passed the legislature’s Insurance and Financial Services Committee with a vote of 9 to 4.
“I was encouraged that both Republicans and Democrats seemed to agree with me,” Rep. Berry said of the vote.
In addition, Rep. Berry is buoyed by the actions of Republican leaders in Washington who have proposed eliminating the benefit caps.
He hopes for continued bipartisan support as the bill moves through the Maine Legislature. He’s not alone.
“Of course we hope it passes,” Cherilee Budrick of Consumers for Affordable Health Care said.
The nonprofit organization has tracked the bill’s progress and listened to the stories of those brought to financial ruin when their insurance policies failed to treat melanoma, breast cancer and other illnesses.
“To have caps defeats the whole purpose of insurance,” Budrick said. “We buy insurance so it is there when we need it.”
Budrick and Rep. Berry point to the burden caps place on taxpayers. When caps are too low, and those who were covered face bankruptcy in the wake of medical expenses, taxpayers potentially bear the costs through greater dependence on Medicare and Medicaid.
“One thing that can and does happen is people go into bankruptcy,” Rep. Berry said. “Taxpayers can end up having to pay for some or all of the tab. Taxpayers shouldn’t be left holding the tab for medical costs when those services are going to someone who has paid for a major medical policy.”
The Bureau of Insurance study indicates removing the caps could result in premium increases of less than one percent.
“There are negligible costs and we can protect people who have paid for major medical policies but who are being threatened with losing homes when facing death,” Rep. Berry said.
“Consumers deserve to be treated with some degree of respect, especially when they have worked hard for to pay for their insurance,” Rep. Berry said. “Taxpayers picking up their bills or dying is not a way to treat hardworking Maine families.”
