Maine Workers & Small Businesses Need Help!



The Problem…


17% of Maine adults are uninsured.  Each day more of those who are insured are enrolling in high deductible policies that provide no preventative care and according to some studies encourage health behavior identical to that of the uninsured (delaying care, not buying necessary prescription drugs, getting care in expensive inappropriate settings i.e. Emergency rooms, rather than their primary care physicians.)


61% of Maine’s uninsured are adults (age 19-64) with incomes below 200% FPL ($35,300 for a family of 4)[i]


Uninsured Mainers are more likely to seek care when illnesses are more advanced and there is a greater chance they will die, despite the fact that early detection and treatment is more cost effective and often saves lives.[ii] 


Example: Uninsured women with breast cancer are 49% more likely to die then insured women.


Lack of insurance may increase the chance of early death by as much as 25%.[iii]


The cost of health care is increasing for Maine businesses exponentially.  While Maine’s largest companies have seen increases of 8-20%, Maine’s small businesses have seen increases of 58% with a 49% increase in just the past two years.[iv] 


Health insurance premiums have risen to unaffordable levels for most Maine small businesses and self-employed.  In 1999, the proportion of small businesses providing health care coverage dropped from 77% to 68%.[v]  In 2002, the cost of small group insurance coverage that provides good benefits and reasonable cost-sharing is about $4,000 per year for employee-only coverage and $8,260 per year for employee and spouse coverage.[vi]  For non-group policyholders, an HMO policy with a reasonable deductible for 2 adults and 1 child is over $1,200 per month or $14,400 per year.  Health care costs are expected to increase over 10% this year[vii] and insurance premiums increases will be even higher


At Risk: Small Business Health Insurance in Maine, a 2000 study, found:


"A large majority (81%) of respondents characterized health insurance as very or somewhat important to their efforts to attract and retain employees, and 87% also believed it was very or somewhat important to offer coverage as a matter of principle or employer philosophy. "[viii]


Example:  The same HMO plan that costs business $2,350 per year in 1996 cost $3,708 last year.  Under Fee-for-Service plans the increase is even greater: 1996: $3,005; 2001: $5350.


Small companies with 50 or fewer workers make up more than 90% of Maine’s business and employ almost 50% of Maine’s workforce.  Currently, only 30% of companies with 2-4 workers and 62%of companies with fewer than 10 employees offer health coverage.  90% of companies with 11-50 workers offer coverage, though often not for dependents.[ix] 


In 1998, 55% of businesses nationally offered health insurance, the figure for Maine, both large and small businesses, was 49%.[x] 


Increasing premium pressure threatens to drop this number even further.  43% of small Maine businesses say they will drop coverage if premiums increase 11-20% and another 21% of companies plan to drop coverage even if premiums stay the same or increase less than 10%.[xi] 


Maine workers least able to afford the increasing costs of health care are without coverage.[xii]




Only 47% of workers earning less then $7.00/hour are even offered coverage by their employer.


26% of workers earning between $7.00-$10.30/hour are in the same situation.



Maine’s health care providers are becoming less able to absorb the costs of providing uncompensated care.[xiii] 


What Does LD 1784 Do?


LD 1784 promotes competition in Maine’s small group health insurance market by offering a voluntary state sponsored alternative.


LD 1784 as amended sets up a voluntary health plan for small businesses and self-employed people in Maine. 


It does 5 important things to make good health care coverage available and affordable:


ü   requires bidders to offer a benchmarked comprehensive benefit plan;

ü   sets up a board to oversee the operations of the plan;

ü   negotiates reimbursement rates with health care providers;

ü   caps the plan’s administrative costs;

ü   maximizes the use of federal matching dollars to keep overall plan costs low.


Additionally, LD 1784 maintains the current protections afforded to consumers under Maine insurance law.


What Are Some of the Duties of the Board?

The Board members oversee the operations of the health plan.  The Board solicits bids from insurers and the DHS to meet the requirements of the health plan.  They also negotiate rates with health care providers and ensure that the successful bidder keeps administrative costs low.  The Board makes sure that the savings are passed onto enrollees, that the plan is financially solvent and that the enrollees are protected against financial risk. 


How Much Will Coverage Under This Plan Cost?

To ensure that the plan is affordable for small businesses and self-employed people, the first stage of the bill requires an actuarial analysis to determine the costs of the plan.  The goal is to keep plan costs lower by maximizing federal matching dollars, controlling administrative costs and negotiating reimbursement rates with providers. 


[i] Information from: A Primer on Health Care Coverage in Maine Produced by the Maine Health Access Foundation, 2001

[ii] Maine Health Access Foundation.

[iii] Maine Health Access Foundation.

[iv] Maine Health Access Foundation.

[v] C St. John, J Ditre, L Pohlman, At Risk: Small Business Health Insurance In Maine.  A “small business” is defined under Maine’s insurance code as a business with 50 or fewer workers.

[vi] Anthem HMO Maine Lock-in Policy, Group Size 2 – 9 contracts, rate effective February 2002.

[vii] Heffler, Levit, Smith, Cowan, Lazenby, and Freeland, Health Spending Growth Up in 1999; Faster Growth Expected in the Future, Health Affairs, March/April 2001, pp. 193 - 203

[viii] C St. John. J Ditre, L. Pohlman.

[ix] Maine Health Access Foundation.

[x] Maine Health Access Foundation.

[xi] Maine Health Access Foundation.

[xii] Maine Health Access Foundation.

[xiii] Maine Health Access Foundation.