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Small Business Employee Benefits and HR Blog

Maine Considers Repeal of its Guaranteed Issue and Community Rating Requirements

May 3, 2011
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The Maine legislature is considering a repeal of its guaranteed issue and community rating requirements in the individual health insurance market. The recent Act To Repeal the Provisions in the Insurance Laws Governing Guaranteed Issue and Community Rating is stirring up serious political debates in Maine this week.Maine to Repeal Guaranteed Issue

Maine implemented its guaranteed issue policy in 1993, and is one of only five states that currently requires community rating in the individual market.  Under community rating, insurers charge all people covered by the same type of health insurance policy the same premium without regard to age, gender, health status, occupation, or other factors.  

However, under the new bill, insurers would be allowed to determine premiums based on the health status of its policy-holders.  The bill would also establish a State High Risk Pool for individuals with pre-existing conditions.

According to Rep. Jonathan McKane:

"Younger, healthier people, they just can't afford those high rates, and so they drop out of the market, which concentrates the pool into older, sicker people; meaning that the insurers have to pay out more in claims which raises rates yet again and puts us into this insurance rate death spiral that we're in... We need to get the younger, healthier people in the market, paying the premiums but not making the claims."

Note: None of this should be taken as legal or tax advice.

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