Maine Businesses Face Hefty Cost Increases As Health Reinsurance Program Goes Into Effect

Sep 12, 2018

A program that’s expected to lower premiums on Maine’s individual health insurance market is set to take effect next January. That’s also when one of the mechanisms to fund the reinsurance program called MGARA kicks in — a monthly surcharge on all health insurance policyholders in the state.

MGARA, the Maine Guaranteed Access Reinsurance Association, is a kind of high-risk pool designed to help people with expensive health conditions get insurance coverage on the individual market and also keep premiums low. It does that by creating a fund to help pay those consumers’ high medical bills. One of the sources of money for that fund is a new $4 per month surcharge on all policyholders in the state.

Individually, $4 a month may not sound like a lot. But for employers who offer insurance to their employees and family members, it adds up.

“For some of them, it’s going to be a seven-figure amount,” says Peter Gore, executive vice president of the Maine State Chamber of Commerce.

Asked whether employers are aware that they’ll soon have a new, additional health care cost, Gore says, in most cases, no.

Trevor Putnoky of the Healthcare Purchaser Alliance of Maine says many of its members are also in the dark about the rollout of MGARA.

“There was a lot of discussion that it would be pushed off until 2020, which is I think what a lot of purchasers anticipated. But at this point in the year, a lot of budgets are already set for businesses in the state, and the $4 per member, per month tax is a pretty substantial cost increase,” he says.

MGARA isn’t an entirely new program. It was established briefly in 2012, then suspended in 2014 when the Affordable Care Act took effect, because the federal law provided a reinsurance program. That program was temporary, so last year the Legislature passed a bill to reinstate MGARA.

Maine just won federal approval for the program in July. The attorney that represents MGARA, Chris Howard, says that hasn’t left much time to implement it by 2019.

“We’re scrambling at this point to put the program together in a fairly condensed time frame and trying to get notice out to all carriers and all employers as rapidly as possible,” he says.

The push to get it up and running by January is because it will substantially lower premiums on the individual market. With MGARA, the highest average premium increase is about 2 percent. Without the program, the highest average increase would have been more than 16 percent.

Howard says the program will provide direct relief for consumers who buy insurance on the individual insurance market.

“But the stability that results from having a stable individual market is something that benefits all insurance markets,” he says.

Howard says a communication about the rollout of MGARA will be sent to health insurance carriers and administrators by Sept. 15, and there will be a workshop in early October about the process for collecting the premium surcharge.

Originally published Sept. 11, 2018 at 4:53 p.m. ET.