Myths and Realities of Health Insurance Reform in Maine

• 80% of the costs of care for a large population of people will be incurred by about 20% of the individuals in that population. The high and rising cost of medical care reflects principally the cost of providing care. Insurance programs are supposed to distribute costs across a large number of people in order to promote affordability. The current insurance system does not effectively do this, leading to significant disparities in affordability among different populations. Reasons for this deficiency include fragmentation of the risk pool caused by differential purchasing practices, the preemptive authority of federal law and the costs associated with various policy initiatives that are, ironically, intended to promote access and affordability. While reform in Maine’s health insurance market may be needed, it cannot substitute for measures to address the underlying cost of medical care.