Re-insurance in Maryland: What's the Story?

The news is in! After very little publicity during the negotiation of these bills, Maryland governor Larry Hogan and Maryland Democrats are celebrating their collaboration to "stabilize" the individual market - the healthcare marketplace created as a result of the Affordable Care Act.

Hogan, who faces re-election this year, is able to come out of this as if he's saved the ACA from the more militant wing of his own party. Democrat politicians are also calling the re-insurance plan a victory. A closer look, however, shows that it is only a temporary fix.

Here are some key points to consider:

1. Without interference, the individual market will collapse.

There are two insurers left on the individual market, down from eight.  There are currently 154,000 covered by the individual market; Kaiser covers one-third and CareFirst covers the remainder.  The individual market has a higher risk population because those who are eligible but healthier and on tight budgets often are willing to take a risk and save money by paying the fine rather than the premium. Premiums on the individual market have been exploding, and it is now at risk of failure.  If the individual market fell apart, the number of uninsured Maryland residents (at 6% as of 2016 and now likely to be a higher figure) would increase. Maryland’s Medicare waiver, which allows for higher hospital rates, could also be at risk.

2. Insurers are effectively bailing themselves out - but only for one year.

Under SB387 (Individual Market Stabilization Maryland Healthcare Access Act of 2018), which is now law, Maryland will pay insurers for the costs of individuals’ medical expenses between $100K-250K (Corridor). A similar plan was originally part of the ACA but was phased out.

To stabilize premiums in the individual market, Maryland estimated it would need $350 million annually. Insurers in the Maryland Health Benefits exchange have been paying a federal tax (2.75% of premium revenues) to cover the cost of running the exchange. For 2019, the federal government put a one year moratorium on this tax. SB387 institutes a state tax for 2019 only, that will collect these revenues from private insurers and Medicaid MCOs and directs the money to a re-insurance fund. 

General and federal fund expenditures increase in FY 2019 and 2020
to pay the Medicaid share of the assessment for calendar 2019.
($ in millions)

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

SF Revenue

-

$300.7

$80.0

$0

$0

FF Revenue

$0

$49.6

$49.6

$0

$0

GF Expenditure

$0

$30.5

$30.4

$0

$0

FF Expenditure

$0

$49.6

$49.6

$0

$0

Net Effect

-

$270.2

$49.6

$0.0

$0.0


3. Again, this plan only works for 2019. 

SB387 is emergency legislation and was negotiated by Governor Hogan, Speaker Mike Busch, and Senate President Mike Miller.  Under this law Maryland is applying for a re-insurance waiver for 2020. This approach will be risky. The federal government encouraged states to apply to CMS for re-insurance waivers under section 1332 the ACA in early 2017 - but approval time has been longer than promised. The guidelines for these waiver are: no increase to federal deficit, must maintain comprehensive coverage, no decrease to the number of insured, and no increases to premiums. So far, the CMS has only given out three re-insurance waivers: Alaska, Minnesota, and Oregon. CMS has put off other states and Minnesota’s waiver caused them to lose $375 million in pass through funding.

4. Maryland’s re-insurance plan showcases the failures of the individual marketplace.

This legislative session, the “Improve the Affordable Care Act” camp was initially divided into two approaches. The first, proposed by civil society groups closely connected to the center of the Democratic party, argued that premiums on the individual market could be stabilized if more healthy people were “punished” for their behavior and called for replacing the now repealed federal mandate penalty with a similar state law. Healthcare is a Human Right took a firm stance against this bill, with Anne Arundel County chapter leader Robert Smith testifying that his income couldn’t provide for the costs of a monthly premium - and that the suggestion that this made him a selfish non-contributor to the general welfare of Maryland’s risk pool was an insult to many people in the state who haven’t been able to buy into the marketplace. The real problem, as we all know, is our for-profit healthcare system.

The other approach - the re-insurance plan - was introduced more quietly, with many decisions made in back rooms and without public input. Co-written by the two insurers that remain in the individual market, the re-insurance plan deserves a great deal of public scrutiny as industry-funded politicians continue to assert that the shortcomings of the Affordable Care Act can be fixed. 

5. Public hearings offer an opportunity to spread the message that the only way forward is Medicare for All.

The state has announced four public hearings in April and May. We encourage our members and supporters to attend these hearings to make the case that this is a last-minute solution from a political class that is out of ideas, and that pretending that the status quo is sustainable puts many people at risk after it runs its course in 2019 - in addition to the 6% of Marylanders already uninsured. We deserve better - we deserve Medicare for All.

EASTON - THURSDAY, APRIL 26, 5-6PM
Talbot Co. Dept. of Parks and Recreation (Chesapeake Room), 10028 Ocean Gateway

BALTIMORE - THURSDAY, MAY 3, 4-5PM
Maryland Health Benefit Exchange, 750 E. Pratt St, 6th Floor

FREDERICK - MONDAY, MAY 7, 3-4PM
Frederick County Local Health Dept, 350 Montevue Lane

WHITE PLAINS - THURSDAY, MAY 10, 5-7PM
Charles County Local Health Department, 4545 Crain Highway

Contact Information:  hchrmaryland@gmail.com; brittany@hchrmd.org or 410-310-4589;
www.hchrmd.org

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