Marketplace health insurance rates for individuals and small group employers in Maine are set to increase by eight and nine percent respectively next January. While any increase in insurance rates is never welcomed news, the approved rate hikes for 2025 are not as high as this year’s double-digit increases, nor are they as large as the insurance companies originally proposed.
Maine Bureau of Insurance Superintendent Bob Carey recently approved the health insurance rates that will go into effect on January 1, 2025. The bureau worked closely with health insurers such as Anthem, Harvard Pilgrim, and Taro Health to lower their initially proposed rates. As a result, the approved rate increases were reduced from a proposed average increase of 14.2 percent across different providers to an average increase of 8.6 percent for individuals, and from a proposed average increase of 14.5 percent to an approved average increase of 9.4 percent for small employers with fewer than 50 employees.
„It’s a lot. Yeah, of course, it’s better than what it was in 2024, you know, when it was close to 15 percent, but nobody’s happy, I don’t think,“ Carey commented on the 2025 increase. Despite the rate hikes, the bureau also took into consideration Maine’s regional economic disparities, which were affecting rates between southern and northern Maine. Insurance companies were charging almost 25 percent more for insurance in the northern part of the state, despite the southern part being more affluent.
As a result of the bureau’s intervention, individuals and small groups in Aroostook, Hancock, and Washington counties will see very modest or no premium increases in 2025 compared to other parts of the state. Carey explained, „What’s been happening over time is that for competitive reasons, carriers were essentially charging more in those three northern Maine counties than they were in the southern Maine counties. So we’re narrowing the gap between the rates charged for those three counties versus the rest of the state.“
The impact of the rate increases will vary depending on individuals’ income levels and insurance plans. People who qualify for subsidies based on their income may not face an increase at all.
There are three main factors determining how much insurance rates will increase, according to the bureau press release. The first factor is the price of service, which includes hospital charges, healthcare provider fees, and prescription drug costs. The second factor is the utilization of services, such as how frequently people use the emergency department and undergo outpatient surgery. The final factor is the mix of services, or what people are treated for and how.
This year, two key drivers of the rate increase are prescription drugs and hospital and healthcare provider costs, which are higher due to both price and utilization. Courtney Cowan, an independent insurance consultant in Maine, highlighted the need to shift more of the cost burden onto drug manufacturers rather than consumers and insurance carriers.
Maine’s reinsurance program, which utilizes state and federal funds to reduce premiums, played a significant role in negotiating lower rate increases for 2025. The program covers the cost of some claims with federal and state money amounting to $70 million per year, allowing insurance companies to seek reimbursement and prevent premiums from increasing significantly.
Without the reinsurance program, Carey stated that the rate increases for 2025 would be almost double. While any increase in insurance rates may be unwelcome news, the efforts made by the Maine Bureau of Insurance to mitigate the hikes and consider regional disparities are steps in the right direction towards ensuring affordable healthcare for all residents.