“Maine’s Marketplace enrollment has been a stunning success. Maine’s uninsured rate dropped 4.5 percentage points between 2013 and 2014 – the first year the Marketplace policies were available. The decline in uninsured was the biggest percentage drop in all New England states . . . However, if the [Affordable Care Act] subsidies are withdrawn, it’s projected that more than 50,000 of the newly insured Mainers will lose their coverage.”
Senator Whittemore, Representative Beck, and members of the Joint Standing Committee on Insurance and Financial Services, my name is Christy Daggett. I am a policy analyst at the Maine Center for Economic Policy (MECEP). I am here today to testify in support of LD 1344. This proposal might create an avenue to protect nine in ten of the 75,000 Mainers insured through the Marketplace from losing their coverage in the event of an adverse Supreme Court decision next month in the King v. Burwell case.
Maine’s Marketplace enrollment has been a stunning success. Maine’s uninsured rate dropped 4.5 percentage points between 2013 and 2014 – the first year the Marketplace policies were available.[1] The decline in uninsured was the biggest percentage drop in all New England states.[2] Sixty percent of all eligible Mainers had bought coverage by the end of the 2015 open enrollment period – the third highest take-up rate in the nation.[3] Maine’s population, with lower annual incomes and high rates of self-employment, is the perfect demographic for the marketplace and accompanying premium subsidies to make a real difference. These benefits are widespread across the state – from towns like North Haven – where 30 percent of residents under 64 are covered through the marketplace – to Rangeley, where 16 percent of residents have insurance through the marketplace.[4] However, if the subsidies are withdrawn, it’s projected that more than 50,000 of the newly insured Mainers will lose their coverage.[5]
The loss of federal subsidies will hurt Maine’s economy. The influx of more than $250 million[6] in federal funds in the form of subsidies and cost-sharing has a significant economic impact for the state, supporting jobs in both the insurance and healthcare sectors. Together, the insurance and healthcare sectors support over 125,000 jobs in Maine.[7] These sectors are critical to our economy. The sudden disappearance of subsidies would destabilize both sectors, and it’s been projected that eventually the spike in uninsured would lead to a commensurate surge in $39 million in uncompensated care at Maine’s hospitals and health clinics[8] – which are already struggling due to Maine’s failure to accept federal healthcare funds to expand Medicaid.
The loss of federal subsidies will also hurt businesses across the state. Families that lose subsidized health insurance through the federal marketplace will have less income with which to purchase goods and services.
The loss of federal subsidies will also have potentially destabilizing effects on Maine’s health insurance market. Healthier people who can’t afford higher premiums will drop their coverage, leaving behind sicker people who have no option but to keep paying much higher monthly premiums. And those premiums will skyrocket still higher: aware of this specter of “adverse selection” in the case of an unfavorable Supreme Court decision, health insurance actuaries already are petitioning the U.S. Department of Health and Human Services for permission to revise their rates for 2016.[9] The RAND Corporation estimates that if the federal marketplace is struck down, coverage will drop 70 percent in affected states, and premiums for marketplace plans will rise by 45 percent.[10]
In the event of an adverse decision, LD 1344 could provide a backstop by re-characterizing the section of the federal exchange doing business in Maine as our Maine state exchange, and grant certain powers to the State of Maine, while leaving the day-to-day running of the exchange to the federal government. This bill might offer a way around what otherwise could amount to an endgame for Maine carriers, providers – and people.
[1] U.S. Department of Health and Human Services. “Maine leads New England in lowering rate of uninsured.” March 2015. Available at http://www.acf.hhs.gov/programs/region1/news/maine-leads-new-england-in-lowering-2014-rates-of-uninsured
[2] Ibid.
[3] Kaiser Family Foundation. “Marketplace enrollment as a share of the potential Marketplace population.” February 22, 2015. Available at http://kff.org/health-reform/state-indicator/marketplace-enrollment-as-a-share-of-the-potential-marketplace-population-2015/
[4] Based on MECEP analysis of March 2015 U.S. Health and Human Services zip-code level enrollment data and 2010 Census zip-code population data for the 0-64 population.
[5] Matthew Buettgens et al. “Health Care Spending by Those Becoming Uninsured if the Supreme Court Finds for the Plaintiff in King v. Burwell Would Fall by at Least 35 Percent.” The Urban Institute, February 2015. See Table 4, “Lost tax credits and cost-sharing reductions and increased number of uninsured under a decision in favor of King, by state, 2016.” Available at http://www.urban.org/research/publication/health-care-spending-those-becoming-uninsured-if-supreme-court-finds-plaintiff/view/full_report
[6] Matthew Buettgens et al. “Health Care Spending by Those Becoming Uninsured if the Supreme Court Finds for the Plaintiff in King v. Burwell Would Fall by at Least 35 Percent.” The Urban Institute, February 2015. See Table 4, “Lost tax credits and cost-sharing reductions and increased number of uninsured under a decision in favor of King, by state, 2016.” Available at http://www.urban.org/research/publication/health-care-spending-those-becoming-uninsured-if-supreme-court-finds-plaintiff/view/full_report
[7] Based on MECEP analysis of December 2014 statistics from the U.S. Bureau of Labor Statistics “State and Area Employment, Hours and Earnings.” 24,000 jobs were in the finance and insurance industry, and 101,500 were in the healthcare and social assistance industry.
[8] Matthew Buettgens et als. “Health Care Spending by Those Becoming Uninsured if the Supreme Court Finds for the Plaintiff in King v. Burwell Would Fall by at Least 35 Percent.” The Urban Institute, February 2015. See Table II, “Hospital spending by those who would become uninsured if the Supreme Court finds for the plaintiff in King v. Burwell, 2016.” Available at http://www.urban.org/research/publication/health-care-spending-those-becoming-uninsured-if-supreme-court-finds-plaintiff/view/full_report
[9] Bob Herman. “Health insurance actuaries want leeway to change rates if Supreme Court kills subsidies.” Modern Healthcare, March 2015. Available at http://www.modernhealthcare.com/article/20150225/NEWS/150229936/health-insurance-actuaries-want-leeway-to-change-rates-if-supreme
[10] Ibid.
