Under Law Signed by Governor Mills, Average Health Care Premiums for Maine Small Businesses to Drop for First Time Since At Least 2001

Maine successfully reverses trend of increasing health insurance premiums for many small businesses and reduces proposed increase in premiums in individual market as health insurers’ rates are finalized for 2023 plan year

Governor Janet Mills announced today that Maine small businesses will see their first annual average reduction in health insurance premiums since at least 2001.

According to final weighted average rates (PDF) filed by health insurance carriers and approved by the Maine Bureau of Insurance for the 2023 plan year, premiums for the small group market – which serves employers with 50 or fewer workers – will decrease by 0.8 percent, a reduction from an initially proposed increase of 3.42 percent.

It is the first time that average health insurance premiums have decreased in the small group market since at least 2001 when such rates began to be consistently tracked, and it is the direct result of Governor Mills’ Made for Maine Health Coverage Act, which merged the small group and individual markets and extended the protections of the Maine Guaranteed Access Reinsurance Association (MGARA) to the small group market. The Federal government approved the merger through Maine’s first-in-the-nation State Innovation Waiver in July 2022.

The reduction in Maine comes as average small group premiums in many other northeast states will increase, including in Rhode Island (PDF) by an average of 11.5 percent (according to preliminary filings), in Vermont (PDF) by an average of 11.7 to 18.3 percent,in Connecticut by an average of 14.8 percent, and in New York by an average of 7.9 percent.

Meanwhile, the final weighted average rate increase in the individual market is 11.4 percent, a reduction from the initially proposed average increase of 14.72 percent. But thanks to the extension of the American Rescue Plan’s expanded eligibility for premium tax credits through the Inflation Reduction Act, more Maine people than ever are now eligible for financial assistance, which will largely protect them from these higher premiums.

The Federal tax credits limit the maximum contribution that eligible consumers pay to a percentage of their income, helping protect them against premium increases. According to the White House (PDF), as a result of the extension of the premium credits, 59,000 Maine residents could save hundreds on health insurance premiums, including 15,000 small business owners and self-employed people who purchase individual coverage. Further, 14,000 additional Maine residents may have health insurance next year than would have it without the new law. These health insurance premium tax credits are available through CoverME.gov.

While the individual rates are rising significantly across the nation for the 2023 plan year for a number of reasons, such as the continued impact of the COVID-19 pandemic and inflation, Maine’s State Innovation Waiver has mitigated the impact of these influences. Without the waiver, rates would have increased by an average of 14.7 percent in the individual market and by an average of 12 percent in the small group market.

“Thanks to the law I proposed and signed, we are reversing the trend of steadily increasing health insurance costs for many small businesses for the first time since at least 2001. This is a victory for many Maine small businesses and their hardworking employees who rely on the small group market for health insurance, and it couldn’t come at a better time. As Maine small businesses grapple with high costs from inflation, this is one less thing they will have to worry about,” said Governor Janet Mills. “I am proud of this progress under our watch. It builds on my Jobs Plan initiative that is also lowering costs for small businesses and their employees, and it sends the message to Maine small business owners and those interested in starting businesses here that we will do all we can to have your back.”

“Governor Mills directed us from the start to take action to help small business owners offer their workers affordable health insurance,” said Jeanne Lambrew, Commissioner of Health and Human Services. “This good result for small businesses stems from the collaboration between the Bureau of Insurance and Office of the Health Insurance Marketplace, the bipartisan support from the Maine State Legislature, our partnership with Maine’s insurance carriers, and the consistent, strong leadership from the Governor.”

“The adjusted premium rates are very encouraging, and show the positive impact of the merged market, particularly for the small group market, which has seen a trend of large increases over the past several years,” said Timothy Schott, Acting Superintendent of the Bureau of Insurance.

Signed into law in March 2020, Governor Mills’ Made for Maine Health Coverage Act helps increase coverage and hold down premiums, saving individuals and employees in small businesses money on health care costs.

“From day one, our goal has been to make health care more affordable and more accessible for working families, small business owners and older Mainers. Together, we’ve enshrined basic patient protections into state law, passed laws to lower the cost of prescription drugs and improve access to lifesaving medication, and worked to bring stability, efficiency and affordability to the health insurance marketplace,” said Senate President Troy Jackson, D-Allagash. “Today’s news proves that we are moving in the right direction and delivering for Maine people and small businesses. We still have a long way to go but please know that I will continue to do everything I can to ensure every Mainer can get the health care they deserve.”

“Governor Mills and her team have worked proactively to make healthcare more affordable. The news about cost-savings for employers is big. Employers want to do all they can to recruit and retain employees, so benefits like health insurance are critical,” said Speaker Ryan Fecteau of Biddeford. “I commend Governor Mills’ team and the experts at the Maine Bureau of Insurance for having the foresight and creativity to propose the Made for Maine Health Coverage Act, then to work with the Legislature to support it. It was a wise move that is paying off.”

“As Senate Chair of the Legislature’s Health Coverage, Insurance and Financial Services Committee, I’ve spent the past four years working to make it easier for Maine people to access affordable health care coverage and ensure small business owners, like myself, can offer health care plans to their employees. I’ve also seen firsthand how the cost of health care has become a huge challenge for small businesses across the state. It’s why I was proud to partner with my colleagues in the Legislature and the Mills Administration on a new law to lower costs for small businesses and employees,” said Senator Heather Sanborn, D-Portland. “By merging the individual and small group health insurance markets, we sought to reduce premiums for people insured through their small business employer, make it easier for small businesses to offer insurance and stabilize the market. I’m thrilled that that Maine people and businesses will finally begin to experience these savings.”

“Our committee stood with consumers and small businesses, honoring their experiences and their needs in our effort to make insurance more affordable. This kind of cost-cutting impact isn’t easy to achieve, but this milestone shows we are on a path that is worth it,” said Denise Tepler of Topsham, House Chair of the Legislature’s Health Coverage, Insurance, and Financial Services Committee. “Making progress on affordability was our goal. Today we have proof that it is working, with small business insurance costs going down.”

Under the law, Maine became 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. Maine received approval by the federal Centers for Medicare and Medicaid Services for the waiver on July 15, 2022.

The Made for Maine Health Coverage Act builds on the work the Mills Administration has also done to make health coverage more affordable for Maine small businesses. In 2021, Governor Mills dedicated $39 million through her Maine Jobs and Recovery Plan to launch 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. The program is scheduled to continue through April 2023.

Maine individuals and families, as well as small businesses, can learn more about their coverage options at Maine’s state-based marketplace, CoverME.gov, the one stop-shop for comprehensive major medical coverage backed with federal and state protections.