Maine: Subsidy Program

Maine: Subsidy Program

Upshot

  • L.D. 1463 was cosponsored by Rep. Marianne Moore (R) and Rep. Denise Tepler (D) with some additional bipartisan support. It was considered in committee but died with the end of the legislative session on May 21, 2022.

  • The bill would reinstate a fee imposed on health insurers that was repealed in 2020 to fund a new Health Care Affordability Fund. The fund would be used to provide assistance to reduce premiums or cost-sharing for individuals enrolled in the state’s Marketplace. The fee would have been imposed on 50 percent of net premiums above $25 million and 100 percent of net premiums in excess of $50 million and divided among health insurers based on their market share.

  • The bill was initially intended to prioritize assistance for individuals subject to the “family glitch” or with incomes at or below 200 percent FPL. The Biden Administration has since finalized regulations to eliminate the family glitch beginning calendar year 2023.

Background

In 2021, Maine transitioned to its own state-based Marketplace. Called Maine Health, this resulted in a ten percent increase in enrollment. Four insurers offered plans in 2022. Premium rates have declined for the past three years, but there will be an average increase of 11.4 percent for 2023 for full price plans. Notably, research has found that 63 percent of adults in Maine experienced one or more health care affordability burdens in the past year, and that 42 percent experienced struggles paying medical bills.

The Main legislature sought to resolve affordability problems brought about by the “family glitch.” This issue prevents family members from accessing APTCs if an employee’s self-only coverage meets the affordability threshold. An employer-sponsored plan is considered “affordable” if it meets two requirements: 1) employee required contribution for self-only coverage does not exceed the 9.5 percent affordability threshold (as adjusted); and 2) an employer-sponsored plan provides “minimum value” to the employee, meaning it covers at least 60 percent of the total allowed cost of benefits and provides “substantial coverage of inpatient hospital services and physician services.” For plan years beginning in calendar year 2022, the affordability threshold is 9.61 percent of that employee’s household income. In 2021, about 34,000 Mainers were subject to the family glitch and about 30 percent of the population in Maine had incomes below 200 percent FPL.

President Biden signed an executive order to fix the family glitch on April 11, 2022. The Treasury subsequently finalized a rule on October 11, 2022 to fix the family glitch, which will take effect in calendar year 2023. The final rule applies affordability criteria to family coverage and applies the minimum value requirement for both employees and related individuals. Employer-sponsored plans will have to cover at least 60 percent of the total allowed cost for a beneficiary and their family and provide substantial coverage of inpatient hospital services and physician services.

The bill says that if the family glitch were to be fixed, the funding would instead be used to provide affordability assistance for individuals with incomes at or below 400 percent FPL and would prioritize assistance for those with the lowest incomes. Despite the inclusion of an alternative plan in the event of a fix to the family glitch, it is possible that President Biden’s fix decreased momentum within the state legislature for this bill.

Summary

This legislation would essentially reinstate the ACA’s Health Insurance Providers Fee. The bill would also establish the Maine Health Care Affordability Fund and an Affordable Health Care Advisory Group. Details on these provisions follow.

  • Health Insurance Providers Fee: This program would reinstate a former federal fee on health insurance companies that was repealed in 2020. By reinstating this fee in Maine, the bill would use the revenue to fund programs to lower OOP health care costs for individuals impacted by the family glitch or who have incomes at or below 200 percent FPL. The federal fee would have been imposed on 50 percent of net premiums above $25 million and 100 percent of net premiums in excess of $50 million and divided among health insurers based on their market share.

  • ·Maine Health Care Affordability Fund: The legislation would also establish the Maine Health Care Affordability Fund, financed partly by the health insurance provider fee along with other allocated money. The Fund would be used to lower premiums or reduce OOP cost-sharing for residents who are subject to the family glitch or have household incomes up to 200 percent FPL. Funds could also be used for other initiatives that increase health care affordability for individual policy holders or small businesses, improve access to coverage for the uninsured or reduce disparities in health coverage, and outreach and enrollment activities. The legislation stipulates that at least 85 percent of the funds must be used for the purposes discussed above unless federal financial assistance provided under the ACA is repealed, in which case 100 percent of funds must be used to replace that assistance. The funds would not be authorized to pay the state’s share of Medicaid funding. Also, if individuals who are subject to the family glitch become eligible for premium assistance tax credits, then the funding would instead have to be used for individuals with incomes at or below 400 percent FPL, with funding prioritized for those with lower incomes first.

    To fund these activities, health insurers would submit a report of their net written premiums for     the preceding year by April 1st each year. They would then receive a certified assessment of at    least 2.85 percent of the net written premiums, but not exceeding the amount that the entity would   have paid under the Health Insurance Provider’s fee, which the entity must pay and would be  deposited into the fund.

  • Affordable Health Care Advisory Group: The bill would also establish the Affordable Health Care Advisory Group to support the development of rules to implement this program and the funded activities. The advisory group would:

    •  Identify barriers to accessing affordable health insurance coverage for residents, including those with incomes at or below 200 percent FPL;

    • Determine the most efficient and effective mechanisms to deliver assistance;

    • Determine the level of assistance needed to make health insurance coverage affordable; and

    • Establish outcome measures to evaluate the success of these activities.