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Daniel Bryant is a retired physician and a member of the Maine chapter of the national Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications.
Forty percent of Mainers struggle with medical debt, according to Consumers for Affordable Health Care. This problem is likely to become even worse when the 18% to 24% premium rate increases approved by the Maine Bureau of Insurance on Sept. 2 go into effect.
To discuss this, the bureau recently held a forum of consumers, insurers, and public health professionals in which the insurers described why they were forced to request those increases. Nearly 40 Mainers spoke up to tell of their own difficulties paying for health care and offered their own ideas for controlling costs. Insurance Commissioner Bob Carey argued for extending the premium tax credits that are due to expire in December, though those apply to only 4% of Maine’s total population.
What is needed to protect Mainers from increasing health care costs, however, is not tweaks to the commercial health care system that has evolved since the 1940s in response to market forces. Rather, I believe an overhaul of the entire health care system is needed. One such reform, at the state level, would be replacement of the current system with a publicly funded one that covers everyone and is still privately and publicly provided (a so-called single-payer system).
The Maine Legislature recently debated one such proposal, LD 1883, An Act to Enact the All Maine Health Act, based on a plan developed by the non-profit advocacy organization Maine AllCare. Unfortunately, the bill did not make it out of committee, despite the fact that it contained the following provisions that would have helped to control some of the most significant drivers of rising health costs identified by the insurers.
Providers’ billing costs, which make up a large part of their charges, would be reduced by a third to a half in a simplified single-payer system. Staff and professional health benefits, bad debt, and charity care would be eliminated. Professional prices and hospital global prices would be negotiated, and by one payer rather than five separate payers.
With everyone covered and no postponement of care due to cost, illnesses would be diagnosed and treated earlier, lessening their severity and expense. And those with illnesses would pay according to their income, not to the illnesses they’re unfortunate enough to get.
One evidence-based formulary would be established, reducing providers’ time dealing with drug lists of multiple plans and allowing negotiation of standardized prices.
Insurers pointed to the threat of reduced Affordable Care Act and MaineCare eligibility meaning shifting of health care costs to them. With a unified system, these separate coverage groups would no longer exist; risk would be spread over nearly the entire population.
Insurers are also concerned that their reinsurance payments (secondary insurance if costs are greater than expected) will decrease. A revised reinsurance plan, spreading the risk over most of the population, would be pursued.
And finally, just as state administrative costs for MaineCare are less than commercial administrative costs (up to 20% of premiums charged), they would be less for a unified public plan. Though not mentioned specifically by the insurers, three of the five insurance companies are for-profit corporations obliged to maintain profit margins appealing to their investors. Public plans do not have profit margins, only responsibilities to patients, providers, and taxpayers.
The take-away from the bureau’s forum should not be just that a lot of Mainers won’t be able to afford the requested premium increases. It should be that, given the cost drivers identified by the insurers, we should focus on reforming the entire system to more effectively manage costs. Comprehensive reform along the lines of the publicly funded universal health care model could do just that. Advocates of other reforms should make their cases as well, including their strategies for cost control, so that the Legislature can choose among them and act before it’s too late.
