The average cost of individual health insurance plans on Maine’s Affordable Care Act marketplace will fall by more than 13 percent in 2021.
On Wednesday, the Maine Bureau of Insurance finalized double-digit average rate decreases for the individual plans offered by Maine’s three marketplace insurers: Anthem Blue Cross and Blue Shield, Harvard Pilgrim Health Care and Maine Community Health Options. The insurers will decrease rates by an average of 12.5 percent, 13 percent and 13.7 percent, respectively.
“The coronavirus pandemic has reinforced how important it is that every person has access to affordable health insurance and the ability to see a doctor,” Gov. Janet Mills said in a prepared statement. “These insurance rates are most welcome news and will make health care more accessible for more people.”
While the average rate is declining, individual rates will vary depending on the policyholder’s age, location, plan and tobacco use. The rates must be approved by the Centers for Medicare and Medicaid Services before they go into effect, but the state’s rate proposals are rarely, if ever, rejected.
In Maine, most of those enrolled in individual plans do no pay full price for their healthcare coverage. In 2020, 85 percent received financial help through the federal marketplace to lower their monthly premiums. But those who are at 400 percent or more of the federal poverty level, such as many small-business owners, do pay full price and benefit directly from any premium decreases.
Insurers attribute the rate decrease to the revival of Maine’s reinsurance program in 2019, which protects insurers from large medical bills accrued by high-risk policyholders, for helping them to cut rates. They are also getting better at predicting the financial impacts of the federal risk adjustment program, which redistributes funds from plans with lower-risk members to those with higher-risk members.
A consultant hired by the Maine Bureau of Insurance credited the rate decrease to insurers more accurately accounting for the impact of the state reinsurance program, known as the Maine Guaranteed Access Reinsurance Association; the expansion of the MaineCare health insurance program; a lower disease rate among the covered population, and lower claim trends on the individual market.
“The average decrease in the individual rates in 2020, and now for 2021, reflect the stabilizing of what was once a fairly unstable marketplace,” said Maine Insurance Superintendent Eric Cioppa. “The reinsurance program, which works behind the scenes, has given Maine more control over its individual market and has made a significant difference in the premiums.”
Harvard Pilgrim Health Care Vice President Bill Whitmore said none of Maine’s marketplace insurers was initially sure how to gauge the impact of Maine’s 2019 decision to resurrect the state reinsurance program. It had been effective at reducing prices back when it was first created, but was phased out when the Affordable Care Act went into effect in 2014.
Insurers use healthcare data from the previous year to set rates for the following year, which means it essentially takes three years for new rates to accurately reflect a major program change such as the 2019 reintroduction of the state reinsurance program, Whitmore said.
“All the carriers in the market tried to predict what would happen, but we didn’t have a lot of experience and we didn’t know exactly how to price it,” said Whitmore, who oversees Harvard Pilgrim’s marketplace program in Maine. “Basically, we underestimated its impact. And now we are correcting for that by lowering our rates.”
An Anthem spokeswoman, Stephanie DuBois, echoed the role of the reinsurance program in allowing marketplace insurers to reduce rates, saying the reactivation “has brought much-needed stability to the market since 2019 and continues to help us bring greater affordability to Mainers.”
Community Health Options, the only marketplace provider based in Maine, explained the lower rates this way: Members had lower total claims costs than expected in 2019, the state reinsurance program lived up to its promise and insurers are getting better at predicting how much they will have to pay into, or take from, the federal risk adjustment program.
“We were expecting the insured pool to get sicker than it actually did,” said Kevin Lewis, president and CEO of Community Health Options. “We were also cautious about how much we could rely on these programs. But over time, we were able to more efficiently utilize these programs for the benefit of our members. This allowed us to drive down our pricing in 2021.”
The individual ACA marketplace was changing even before the COVID-19 pandemic hit Maine and the thousands who lost their jobs scrambled to find new health insurance plans. Insurers have yet to factor pandemic impacts into the rates for individual marketplace plans, and say they hope health trends will have normalized by the time the three-year cycle requires them to do it.
From March 2017 to March 2020, individual marketplace enrollment had fallen to about 65,000 people, a 22 percent decline. As markets get smaller, those who remain are usually less healthy, driving up premiums, but the data show that is not true in this case. Medical costs among individual insurance policyholders have increased just 5.5 percent over that three-year period.
That is most likely because some of that population decline was due to the expansion of the MaineCare program, which shifted people who had been covered on the ACA marketplace to the MaineCare program, according to a report prepared by Gorman Actuarial Inc. of Massachusetts this month for the state insurance bureau.
The bureau also announced Wednesday that it will migrate in November from the federal ACA marketplace at healthcare.gov to a Maine-based marketplace, which will give Maine more flexibility to improve the shopping experience for the more than 65,000 Mainers who currently purchase health insurance for themselves, and enable Maine to invest and target resources otherwise going to the federal government to enroll uninsured Mainers in affordable coverage.
Maine’s marketplace will be available at CoverME.gov.