Maine’s marketplace health insurance rates will increase again, but not as much as last year

“It is worthwhile to spend a little time and make sure that you are purchasing an authorized insurance plan from a Maine licensed company," said acting superintendent Timothy Schott. (istock photo)

Marketplace health insurance rates for individuals and small group employers will go up by eight and nine percent respectively next January. But the rate increases are not as high as this year’s double digit hikes, nor are they as large as the insurance companies originally proposed.

Maine Bureau of Insurance Superintendent Bob Carey recently approved health insurance rates that go into effect January 1, 2025. The bureau worked with health insurers including Anthem, Harvard Pilgrim and Taro Health to lower their initially proposed rates, according to a news release. 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 the 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, you know, close to 15 percent, but nobody’s happy, I don’t think,” Carey said about the 2025 increase.

For next year, the bureau also asked insurance companies to consider Maine’s regional economic disparities, 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 of the state being much 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.

“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,” Carey said. “So we’re narrowing the gap between the rates charged for those three counties versus the rest of the state.”

Depending on individuals’ income levels and insurance plans, not everyone will be impacted equally by the increases, Carey said. People who qualify for subsidies based on their income may not face an increase at all.

Why insurance premiums are increasing

There are three factors determining how much insurance rates will increase, according to the bureau press release

The first one is the price of service, which means how much hospital charges, healthcare provider fees and prescription drugs cost. The second one is the utilization of services, meaning how frequently people use the emergency department and increases in outpatient surgery, for example. And the final one is the mix of services — 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.

“We need to get drug manufacturers to have a greater share in the cost than the consumer and the insurance carriers do,” said Courtney Cowan, an independent insurance consultant in Maine. “If we could ever make that happen, legislatively, we’d probably see different insurance structures.”

Maine’s reinsurance program, which uses state and federal funds to reduce premiums, allowed the bureau to negotiate lower rate increases, Carey said. Essentially, federal and state money — amounting to $70 million per year — covers the cost of some claims so insurance companies can seek reimbursement from these funds and keep premiums from increasing.

Without reinsurance, the rate increases for 2025 would be almost double, Carey said.

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