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April 11, 2018

Maine looking to reinstate 'high-risk reinsurance' pool

Courtesy of Maine Bureau of Insurance
Courtesy of Maine Bureau of Insurance
Eric Cioppa, Maine's insurance superintendent, shown in Washington, D.C., in this 2016 file photo, is considering reinstating the Maine Guaranteed Access Reinsurance Association program that ended in 2014 as a way to stabilize Maine's individual health insurance market.

As the Affordable Care Act continues to be dismantled by the Republican-led Congress and the Trump administration, Maine's Bureau of Insurance is proposing to reintroduce a successful state program that pooled high-risk individuals as a way to stabilize the individual health insurance market.

Prior to the introduction of the ACA and its guaranteed access provisions in 2014, which essentially eliminated the need for traditional high-risk pools because people with pre-existing conditions could not be turned down by insurers, persons with pre-existing conditions who applied for commercial health insurance could be turned down or given a higher rate than healthier applicants.

According to an article in The Actuary, Maine's brief pre-ACA effort to pool high-risk individuals involved a variation involving "high-risk reinsurance pools" in which high-risk individuals remained in the commercial market, but behind the scenes, with insurance carriers ceding all or part of their risk exposure for the high-risk individuals to the reinsurance pool in exchange for paying a premium. At the time it was approved by the Maine Legislature in 2011, only two carriers remained in Maine's individual market, The Actuary reported, and rates had reached unaffordable levels.

The Maine Guaranteed Access Reinsurance Association program was implemented in July 2012 and immediately led to increased participation and rates that were 20% lower in the individual market, according to The Actuary.

According to Maine Bureau of Insurance, MGARA was funded by reinsurance premiums paid by health insurers as well as by a $4 per member per month assessment across all segments of the health insurance market.

Bureau of Insurance proposes reactivating high-risk reinsurance pool

Now, with Maine's individual market again facing higher costs — due, in part, to political uncertainty about the fate of the ACA that has driven several insurers out of that market — the bureau is hosting two public information meetings this week on its proposal to reactivate MGARA, the 2012-2013 state initiative that covered the higher-risk segment of Maine's individual health insurance market.

The initiative ended in 2014 when the ACA introduced a federal transitional reinsurance program that has since been terminated.

In a news release announcing its proposed application to the U.S. Department of Health and Human Services to reactivate MGARA, the bureau said it is seeking a "state innovation waiver" under a provision of the federal ACA that allows states "to pursue innovative strategies to provide its residents with access to high-quality affordable health insurance."

In 2017, the Maine Legislature enacted a law that allows MGARA to resume operations, upon approval of Maine Insurance Superintendent Eric Cioppa — with resumption being contingent on the federal government granting a Section 1332 innovation waiver.

Under the proposed waiver application, savings to the federal government as a result of MGARA's operation would be returned to Maine for the purpose of allowing MGARA to provide further premium relief to the individual market, the bureau said, adding that the waiver application is required to be revenue neutral to the federal government.

More detailed information regarding the proposed waiver application may be viewed at the Maine Bureau of Insurance website here.

Public information meetings will be held Thursday and Friday to explain the proposal and to accept public comments.

Here's the schedule:

  • Thursday, April 12, 5 p.m. to 7 p.m., Board Room, Husson University, 1 College Circle, Bangor.
  • Friday, April 13, 5 p.m. to 7 p.m., Abromson Community Education Center, University of Southern Maine, 88 Bedford St., Portland.

Written comments also will be accepted through May 2 by email sent to karma.y.lombard@maine.gov or by mail to Maine Bureau of Insurance, 34 State House Station, Augusta, ME 04333-0034.

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