Federal Government Approves Maine’s Plan to Improve Health Insurance for Small Businesses

Maine’s State Innovation Waiver – part of Governor Mills’ 2020 health reform law – implements first-in-the-nation innovations to stabilize the market and hold down costs

Governor Janet Mills announced today that the Federal government has approved Maine’s plan to improve health insurance for small businesses by implementing first-in-the nation innovations to help increase coverage and hold down premium increases, which will save individuals and employees in small businesses money on health care costs.

The U.S. Centers for Medicare and Medicaid Services notified the Maine Bureau of Insurance today that it has approved Maine’s request for a State Innovation Waiver. The waiver is the result of Governor Mills’ bipartisan health reform law – the Made for Maine Health Coverage Act. Health insurance premiums are rising in Maine for 2023, as they are across the county, but Maine’s federal waiver will keep them from rising as much as they would have, resulting in premiums that are on average 8 percent lower in the individual market and 6 percent lower in the small group market than they would have been without the waiver. For example, a 40-year-old with an individual plan may have paid $99.31 more on their monthly premium in 2023, but with the waiver the premium increase will be $64.35, a savings of $34.96 or nearly $420 annually, not counting federal financial assistance; while a 40-year-old with a comparable small group plan may have paid $44.02 more each month in 2023, but with the waiver the premium increase will be $15.92 - a savings of $28.10 or over $190 annually.

The individual market serves people who buy insurance on their own with Federal financial assistance while the small group market serves employers with 50 or fewer workers.

Under the now-approved waiver amendment, Maine will merge its individual and small group health markets into a single, pooled market beginning in 2023. This merger will stabilize the market and allow Federal funding through the Maine Guaranteed Access Reinsurance Association (MGARA) – which has stabilized Maine’s individual market since 2019 – to be extended to the small group market for the first time. Reinsurance provides a direct benefit to consumers by paying a portion of provider claims that would otherwise be paid by consumers through higher premiums. This change is projected to reverse the trend of high premium increases and declining enrollment in the small group market while continuing to limit price increases in the individual market. Maine small businesses have been helping to fund the MGARA program through monthly assessments paid by all health insurance policies in Maine. Adding the small group market to the MGARA program will also now allow Maine small businesses to benefit from this program.

It will also help insulate Maine’s small businesses from a nationwide increase in health costs due to inflation, pandemic-induced health care workforce shortages, the ongoing need for COVID-19 care, and the end of pandemic-related financial assistance. Proposed premiums for 2023 in Maine may increase on average by 3.4 percent for small businesses, which is far lower than the proposed small business premium increases in states such as New York (16.5 percent), Vermont (14.6 percent (PDF)), and Rhode Island (11.5 percent (PDF)).

Maine is the first state in the nation under the Affordable Care Act's 1332 waiver program to provide Federally supported reinsurance to both small employers and individuals. MGARA, supported by Federal funding and fees on health insurers, pays for part of the cost of the most expensive health bills, lowering and stabilizing health insurance premiums.

“Small businesses are the backbone of Maine’s economy, providing jobs and crucial benefits like health insurance to tens of thousands of Maine people. Ensuring that health insurance remains affordable is critical, not only for the health of small businesses but for the health of their employees as well,” said Governor Janet Mills. “Our bipartisan health reform law will stabilize the health insurance market and hold down health insurance costs for small businesses, building on my Administration’s work to make health insurance more affordable for businesses and their hard working employees.”

"I recently helped my adult son shop for coverage through a marketplace in another New England state and couldn't believe how much more expensive the premiums were than what he would have paid in Maine,” said Sen. Heather Sanborn, co-chair of the Legislature’s Health Coverage, Insurance and Financial Services Committee. “I'm proud of the work by the Legislature and the Mills Administration to hold rates down and look forward to extending these powerful tools to benefit folks who work for Maine's small businesses."

"The Health Coverage, Insurance and Financial Services Committee worked with the Mills Administration to pursue this waiver application to help our small businesses better afford coverage for their employees,” said Rep. Denise Tepler, co-chair of the Legislature’s Health Coverage, Insurance and Financial Services Committee. “I am so pleased that this plan can move forward to expand the success Maine has had with reinsurance in holding down our marketplace rates."

“Federal approval of Maine’s innovative plan to improve health coverage is good news for Maine consumers and small businesses,” said Ann Woloson, Executive Director of Consumers for Affordable Health Care. “It will make it easier and more affordable for Maine people to get the health coverage they need by holding down costs using tools already shown to work in our state. We look forward to these changes in 2023 made possible by the Mills Administration and the Legislature.”

Maine’s plan also received the support of national patient organizations (PDF) such as the American Cancer Association’s Cancer Action Network, the American Heart Association, and the American Lung Association, among others.

Governor Mills has prioritized helping small business owners and Maine workers afford health care, recognizing that small businesses are the backbone of Maine’s economy and a significant source of health insurance for Maine people.

Through her Maine Jobs & Recovery Plan, the Governor has launched the Small Business Health Insurance Premium Relief Program that lowers the cost of monthly health insurance premiums for small businesses and their employees. Under the program, health insurers receive financial assistance to reduce premiums for their small business customers by $50 per covered worker per month and by up to $130 per month for family coverage. For the month of May 2022, 5,841 Maine Small Businesses received premium credits through the program. This represents a total of 46,802 Mainers (employees and their families) receiving premium reductions. $2,066,140 in premium credits went to small businesses in May, and more than $14 million in premium credits have been provided during the first six months of the program. The program is scheduled to continue through April 2023.

The Governor is committed to delivering affordable, quality, accessible health care for all Maine residents. As her first official action on her first day in office, Governor Mills signed an executive order to expand Medicaid (MaineCare), consistent with the will of Maine people as expressed in a 2017 ballot initiative. Today, more than 95,000 Maine people have access to health care through the expansion, and the uninsured rate among non-elderly Maine people has fallen by about 25 percent, from 9.1 percent in 2018 to 6.7 percent in 2020. In her first year in office, she also restored a program to help low-income older residents afford prescription drugs.

During her second year in office, Governor Mills led a pandemic response that ranked best in the continental United States, according to The Commonwealth Fund, and Maine received an “A” according to a 2022 National Business and Economic Review analysis. Maine earned these strong reviews despite being considered one of the states most vulnerable to harm from COVID-19 given its demographics and economy, according to Oxford Economics.

In her third year, Governor Mills received federal approval for and launched CoverME.gov, Maine’s Health Insurance Marketplace, which was also authorized through the Governor’s Made for Maine Health Coverage Act. Under the law, the State of Maine runs its own Health Insurance Marketplace, which better tailors the health insurance experience to Maine people and their needs. In its first open enrollment for 2022, CoverME.gov enrolled 66,095 individuals, a 10 percent increase over 2021, which reversed declines in Marketplace plan selections since 2017.

The Made for Maine Health Coverage Act has also reduced out-of-pocket costs for primary and behavioral health care and simplified co-pays and deductibles through Clear Choice standardized plans.