WASHINGTON – Maine’s cost of health care has reached a critical breaking point, according to the state’s commissioner of professional and financial regulation, Catherine Longley.

Longley testified before the House subcommittee on employer-employee relations on Tuesday to weigh in on the issue and the question: “The Rising Cost of Health Care: How are Employers and Employees Responding?”

Longley’s department deals with the state’s health insurance policies.

On average, Maine residents pay $3,901 per year for individual medical coverage, Longley said, which brought total medical costs throughout the state to $5 billion in 1999. The price tag is expected to rise to $9 billion by 2010.

The purpose of the hearing was to find out why costs were increasing so quickly and what the increases would mean for employers who provide health care and for their employees, said subcommittee chairman, Rep. Sam Johnson, R-Texas.

“This is our first hearing on the critical issue of health care costs,” he said.

Longley attributed Maine’s health care costs to several things including what she called the insurance “death spiral.”

When insurance rates balloon, healthy young individuals tend to get rid of their insurance, while those people with more health problems would remain insurance carriers. That means that with only health-risk individuals carrying insurance, the cost of insurance goes up, she said.

“This can, and, in fact is likely to result in the ultimate collapse of the individual health insurance market in Maine within the next five years,” Longley said.

An HMO policy for a Maine family of four would cost more than $2,000 a month, she concluded.

Employers are deterred from providing health insurance when costs are high or they shift some of the direct cost to their employees to compensate for the costs, she said.

Since there are only four insurance carriers in the state and Anthem insurance provides nearly 50 percent of state coverage, employers and individuals don’t have an opportunity to bargain-shop, she said.

Longley said insurance mandates (Maine has 24), which force insurers to cover specific illnesses they might not otherwise, have contributed to rising health care costs.

She cited a mental health parity law passed by the Legislature last session but vetoed by Maine Gov. Angus King, which would have expanded coverage to 11 additional mental health areas. Longley related how King said in his veto message, “When you are in a hole, the first rule is not to dig any deeper.”

The state couldn’t afford to cover any additional mandates, Longley said. She said the state has even considered if it has too many hospitals, in order to cut costs.

Longley told a brief story about a Maine man whose daughter needed elective surgery. The man called four hospitals and none of them could tell him how much the surgery would cost.