After months of turmoil on Maryland’s individual health exchange, the General Assembly will get its first crack at tackling some of the forces that led to significant increases in premiums this year.
The legislature’s work will have to take on a sense of urgency as insurance companies predict that without changes, the state’s exchange could collapse by 2019.
“If we don’t act next year, it’s very likely that we won’t have an individual market in 2019 in Maryland,” Deborah R. Rivkin, CareFirst BlueCross BlueShield’s vice president for government affairs and a member of the Maryland Health Insurance Coverage Protection Commission, told the commission at a meeting last week.
Given the complexity of the issue, the legislature will likely only have time during the 90-day session to consider fixes to help stabilize the market, not the types of sweeping reforms that could transform health care in the state.
Turmoil over the last year
The Maryland Health Insurance Coverage Protection Commission was created last year by the legislature to keep an eye on potential changes from the federal government and how the state could react to those changes. Since the end of the 2017 session, those potential changes, once abstract, became real.
In October, just weeks before the 2018 open enrollment period began, President Donald Trump halted cost sharing reduction payment subsidies to insurance companies. That forced the insurers to ask the Maryland Insurance Administration for higher rates than the already significantly increased rates approved earlier in the year.
Senate Republicans added to the changes earlier this month, when a repeal of the Affordable Care Act’s individual mandate was added to the chamber’s tax reform plan. A House tax plan passed last month did not include a repeal of the individual mandate, but it could be included after the two chambers emerge from conference committee with a final version of the tax overhaul for the president to sign into law.
“It’s just a shame that the leaders in Washington don’t have an understanding of the health care delivery system,” said Maryland House Speaker Michael E. Busch. “Don’t get me wrong, it’s a complex system, but they are doing this on the fly without any idea of how it’s going to hurt their citizens in all their states.”
Maryland Gov. Larry Hogan also opposed the changes the federal government has made so far this year, saying they do not work for the state. But he also thinks the system needs changes.
“The governor believes that the current health care system needs to be fixed, but many of the proposals that have been considered in Congress this year do not work for Maryland,” Amelia Chassé, a spokeswoman for the governor, said. “The governor has consistently said he will not support a proposal that causes Marylanders to lose health care coverage, and he continues to call on on Congress to work together to achieve common sense, bipartisan solutions to improve our healthcare system.”
On top of the federal changes, Maryland’s individual exchange dealt with in-state turbulence as well.
Four insurance companies submitted rate requests to the Maryland Insurance Administration last May. By the time the administration approved final rates in August, only two companies were left in the market.
UnitedHealthcare pulled out of the market in June while Evergreen Health, a co-op created under the Affordable Care Act, was placed in receivership when an agreement to purchase the company and convert it to a for-profit business fell through.
A state mandate?
One of the primary issues the legislature looks at will be the individual mandate.
Insurers are worried that if the individual mandate is repealed, there will be no incentive for healthy people to continue to buy insurance. That would drive up insurance premiums because the pool of customers would be mostly filled with sick people.
But how Maryland could respond to federal action on the individual mandate varies depending on who is examining the issue.
One popular approach would be to replicate the federal individual mandate in Maryland with a state mandate, just as exists in Massachusetts, which instituted a mandate before the Affordable Care Act was passed.
Under this approach, Maryland would ask taxpayers if they paid an individual mandate to the federal government, if required to do so under the stipulations of the Affordable Care Act. If they did not, but would have done so if the mandate was in place, then they would pay that at the state level instead.
“We want whatever is now the federal law to continue to be the law in Maryland,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative and a member of the coverage protection commission. “We think it’s just very important, and the people in Maryland believe this, that what’s now the individual mandate needs to be protected.”
DeMarco wants to see a state mandate that would replicate the federal mandate entirely, but others think the state could benefit by increasing that mandate penalty.
Currently, the penalty would be 2.5 percent of a payer’s income or $695, whichever is higher. But some, including Kaiser Permanente, one of the two remaining insurers on the individual market in Maryland, think a higher rate would get more people to sign up for insurance.
Del. Chris West, a member of the commission who also sits on the Health and Government Operations Committee, said the individual mandate may not be as important.
“We’ve had the mandate all along,” the Baltimore County Republican said. “Presumably, until (former President Barack) Obama left office, the members of his office were important. … I don’t think (the individual mandate) gets us to a solution to the problem. I think the problem is much deeper than that.”
He said a mandate could still work, but only if the benefits package insurers must offer is reduced, so that the overall cost of care is not as high.
Stabilizing the market
During the interim between legislative sessions, the Maryland Health Insurance Coverage Protection Commission heard several options to stabilize the insurance market and help bring costs down. They came from all sides of the issue, including insurers and community advocates.
But members of the commission came away agreeing there does not appear to be single solution for the issue.
Creating a reinsurance program, similar to the types of programs operated in other states, is one solution favored by insurance companies. Reinsurance allows an insurance company to buy insurance from another insurance company, which reimburses the initial company for claims above a certain dollar amount.
Del. Kirill Reznik, a member of the commission, said ideas like reinsurance would require a waiver from the federal government, which could be uncertain given the political climate.
“Under this current administration and under the current political environment, I don’t see that as a guarantee,” he said.
Reznik, a Montgomery County Democrat, did like a proposal brought to the commission by CareFirst CEO Chet Burrell. Burrell proposed requiring every insurance carrier in the state to also participate in the individual market, or else pay a fee.
CareFirst and Kaiser are the only insurers on the individual market in Maryland, despite 11 carriers overall in the state’s group markets.
But any plan would require data and information. The commission raised the possibility at its December meeting of bringing on an independent actuary to model out proposed solutions.
“The problem is there’s no flesh on any of these skeletons,” West said about the proposals. “We don’t know how much and how it’s going to affect people.”
West, Reznik and other members of the commission have proposed the formation of a legislative work group to work through the proposals and receive input from an actuary throughout the session to come out with a plan.
Both legislators would like to see a single large bill formed, because of the intricacy of the health care system.
“If we tried to do it with small bills, they wouldn’t have fit together seamlessly,” West said. “The advantage of doing it in one bill is you have all these moving parts.”
Reznik, though, thinks it could be easier to pass individual parts through small bills.
“One think I have learned in the legislature is that smaller bills are easier to pass,” he said. “But if you do a lot of small bills, you have to be very careful that they all work together.”