Private Insurance

By Joseph P. Ditre
and
Jonathan R. Bolton

In 1993 and 1994, an effort to make health insurance the right of every American was defeated by the powerful insurance industry. While arguing against government involvement in health care, the private insurance industry promised Americans in TV and newspaper ads that HMOs (Health Maintenance Organizations) could control costs and cover many, if not all, uninsured citizens using the savings. The ads begged Americans to turn back government attempts to regulate the industry in exchange for the promised benefits of managed care. National reform was defeated. Managed care took over the health insurance industry.

While most Americans lost the freedom to choose their provider, they did not get many of the promised benefits of managed care. In bold attempts to attract more customers, several HMOs sold policies for less than their value. The under-pricing made it seem as though managed care might work. Not so. Once the HMOs could no longer afford to offer policies as such low prices, costs shot up. Costs are still rising and in response HMOs are cutting benefits and raising prices. As a result, with the exception of children and families getting coverage under MaineCare or the Cub Care (see sections 2 and 3), the number of uninsured Mainers is growing.

The private health insurance market continues to change dramatically in Maine. While health insurance is generally available to those who can afford to buy it, the price for good coverage is out of reach for many Mainers. Most health care experts now agree that government action is needed to reverse these alarming trends. One particularly effective solution may be to expand the MaineCare and Cub Care programs to cover all those that cannot afford to buy private insurance. Such an expansion would be cost-effective and could be done by the Maine legislature at any time without the approval of Congress. However, until this expansion occurs, private insurance is the only option for a majority of Mainers.

Buying Health Insurance for You and Your Family

Insurance policies offered directly to individuals and families by insurance companies are called individual or "non-group" plans. Self-employed, sole proprietors, or older persons who are not yet eligible for Medicare often buy non-group plans, although they are available to anyone under 65 that can afford them . Both HMO and traditional indemnity non-group plans are available in Maine.

Indemnity plans used to be the most common type of insurance. Indemnity plans allow you to choose any health care provider you wish and will not interfere with medical decisions made by you and your doctor. However, all indemnity plans have a deductible-a certain amount that you are required to pay out-of-pocket before your insurance will begin paying for services. Deductibles usually range from $250 to as much as $15,000 per year. Indemnity plans may also require you to pay a coinsurance--a percentage of any bills you incur after reaching the deductible amount. Monthly premiums for indemnity plans range from under $100 for a plan with an extremely high deductible to about $500 for a plan with a low deductible. Adding family members to the plan will increase your monthly premiums significantly. Indemnity plans are becoming harder to find in Maine as HMOs become more common. As of December 2000, only Anthem Blue Cross/Blue Shield offers non-group indemnity plans in Maine.

HMO plans generally cover more services and have much lower out-of-pocket costs than indemnity plans. However, HMO plans also limit your choice of doctors and can refuse to pay for a service if they decide it is unnecessary. A comprehensive HMO policy that includes prescription drugs is very expensive. For a single individual, prices can range from about $750 to over $900. Adding other family members to a plan will raise the price significantly-often to well over $2,000 a month. As of January 2004, there were three companies that offer non-group HMO plans in Maine: Anthem Blue Cross/Blue Shield, Aetna, and Cigna Healthsource. Phone numbers are provided below:

Anthem Blue Cross/Blue Shield: 1-800-585-0099

Aetna U.S. Healthcare: 1-800-895-6667

Cigna Healthcare: 1-800-642-5551.


Information on Small Group Plans, Large Group Plans, and COBRA