ANNAPOLIS — Maryland lawmakers were still making changes to a bill designed to stabilize the individual health insurance market hours before a hearing Wednesday, demonstrating the complexity of finding a solution to federal health care changes.
Late changes to a bill presented to the Senate Finance Committee allowed it to dovetail with several other bills designed to stabilize premiums and get more people insured, but illustrated the chaos that could ensue this session as multiple bills are considered.
“It seemed to many of us that if we didn’t do something, that the exchange was just going to blow up,” said Sen. Thomas M. “Mac” Middleton, D-Charles County.
Middleton chairs the Senate Finance Committee and sponsored the bill that would require the state to seek a federal waiver to institute a reinsurance program using federal funding. While the state applies for that waiver, the bill would also introduce a stopgap $350 million reinsurance fund for Maryland insurers participating in the individual market in 2019, using a variety of one-time taxes and fees.
Maryland’s individual market insurers said providing a reinsurance fund for 2019 would be critically important for stabilizing the market, which otherwise could see premiums rise 30 to 50 percent.
CareFirst BlueCross BlueShield President and CEO Chet Burrell said for every $100 million in the reinsurance fund, about 8 percentage points of premium increases could be avoided.
At the same time the stopgap measure is set up, the legislation would also require the state to pursue a federal waiver to set up a reinsurance program.
But Maryland Insurance Commissioner Al Redmer said the state needed a short-term plan for 2019 or it may never be able to set up a long-term solution.
“I’m convinced that if there is no short-term solution, we’ll never have the opportunity for a long-term solution,” he told the committee. “I believe the market will implode if we don’t act and act soon.”
The short-term reinsurance program would be funded by various fees, including a 2.75 percent tax on insurance carriers. That tax is assessed federally every year but was set aside for 2019. Instead, carriers will pay that to Maryland, under the legislation.
Middleton expects that to pay for about $200 million to $250 million, and a similar tax reprieve for HMOs would provide another $140 million for the fund.
His bill originally would have added money to the reinsurance pool by adding funds from a state-level individual mandate, about $50 million. But that funding and a 3 percent surcharge on carriers participating in the small group market but not the individual market, were removed from the bill before the hearing.
That change, hours before the bill was presented to the committee, illustrated the complexity the legislature faces in crafting its measures to stabilize the individual market for the 2019 plan year.
Using individual mandate funds originally conflicted with another bill presented to the committee, sponsored by Sen. Brian Feldman, D-Montgomery, also a member of the finance committee. Feldman’s bill implements a state individual mandate and allows payers to instead use the penalty as a down payment on other health plans.
Even an hour before the committee hearing began, Feldman argued for his bill’s use of individual mandate funds over Middleton’s at a press conference.
“Those dollars should be used to incentivize people to buy health insurance,” he said. “It shouldn’t be redirected to another reinsurance program, which I think we also need, but these dollars should be directed like a laser beam towards directing people to buy health insurance.”
As the legislature considers these and other bills this session, it will have to consider how the bills overlap with not just other introduced bills, but what the federal government is willing to do.
A long-term reinsurance plan funded by the federal government must be approved by a waiver.
Another plan presented Wednesday would create a basic health plan in Maryland. That too must be approved federally. And even if it is approved, President Donald Trump’s administration has taken aim at these plans by cutting cost-sharing reduction subsidies.
Gov. Larry Hogan has met with legislative leadership about plans to stabilize the health insurance and has said he will listen to what leaders come up with. He has offered no plan of his own.
“The stakes are tremendous and if nothing is done and a 50 percent increase is allowed to take place, it could cause this market to collapse entirely. Thousands could lose their health insurance and the hospital waiver could be in jeopardy,” Mathew Palmer, a Hogan legislative policy officer told the committee. “The Hogan administration is committed to working together with the House and the Senate to finding both a short-term and a long-term solution to this problem.”
Correction: A previous version of this story incorrectly spelled Mathew Palmer’s name.