A court case that questioned how much is enough was decided Thursday against Maine’s largest health insurance company and in favor of consumers.

This decision should serve as a reminder that Maine’s high health costs are a problem, but raising rates should not be the only response.

Anthem Health Plans of Maine appealed a decision by the state insurance superintendent Mila Kofman, who denied the company 2009 premium increases as high as 38 percent for one of its individual plans, which would have let it show a profit in all of its product lines for the year.

Instead, Kofman determined that since the company was making a 3 percent profit on all of its Maine business, it could stand to break even on some of its individual plans.

Instead of giving Anthem its requested 18 percent average increase, Kofman approved a 10.9 percent increase.

On Thursday, Justice Thomas Humphrey ruled that Anthem was not guaranteed a profit on every product that it sells. Humphrey said state law requires insurance rates to keep the company solvent so it can meet its obligations, but that doesn’t make it immune from an economic downturn.

Advertisement

The decision was the right one, and, if it survives an appeal, could have repercussions elsewhere.

Although the Maine court’s decision isn’t binding outside the state, The Wall Street Journal reported that regulators around the country are handling similar appeals by WellPoint, Anthem’s parent company, and will be likely to study the decision carefully.

These cases, combined with protections in the new health care law that make it more difficult to deny coverage to people when they are sick, puts pressure on the insurance industry to change the way it does business.

Instead of simply raising rates in response to higher costs, companies should focus on ways to compensate providers for helping their patients live healthier lives.

A system which lets companies like Anthem to push all cost increases onto policy holders in the form of higher premiums — making a profit on every product no matter how high the costs go — does not create the right incentives.

Anthem, along with every player in the system, should have an interest in reducing costs in a way that would not deny people the care that they need.

 

Comments are no longer available on this story