Despite the expectation of a reinsurance program for 2019, Maryland’s individual market health insurers will likely file for significant premium increases when their annual rate requests are released next week.
The insurers will not consider the state’s pending reinsurance waiver application in their rate requests and will likely refile for lower rates once that application receives federal approval.
Testifying at legislative committee meetings and other public forums this year, insurance executives have said they could file for average monthly rates between 30 and 50 percent for next year.
Once a reinsurance waiver is approved, the insurers will refile their rate requests, likely only asking for premium increases around 10 percent.
But even those smaller increases could be significant for Maryland families buying insurance on the individual market.
“Frankly, we’ve gone 10 years backwards,” said Dr. Peter Beilenson, the former CEO and president of Evergreen Health, a state-based insurance cooperative that folded last year. “Basically, there’s not much affordable coverage anymore. Even with a subsidy that’s relatively significant, you’re still going to have high deductibles.”
Beilenson purchases insurance for his family of four on the individual market, paying around $2,500 a month with a $7,000 deductible.
With even just a 10 percent increase, his family could be paying $3,000 more a year in insurance premiums.
After Beilenson’s Evergreen folded last year, the individual market in Maryland was left with just two insurers: CareFirst BlueCross Blue Shield and Kaiser Permanente. Their increases last year averaged between 22 percent and 50 percent, with some plans seeing larger increases after the federal government ended cost-sharing reduction subsidy payments.
The lack of competition on the market has driven some of the premium increases, Beilenson said. While CareFirst and Kaiser cover most of the Interstate 95 corridor, only CareFirst covers Maryland’s rural counties.
Because of the premium increases, and the expectation that rate increases for 2019 would also be significant, the Maryland legislature and Gov. Larry Hogan enacted a measure to allow the state to pursue a federal reinsurance waiver. Funding for the reinsurance program will include about $365 million from an assessment on insurers.
Reinsurance pays insurers for claims that fall over a certain amount but below a cap. The state has not yet determined the threshold where claims go into the reinsurance pool, but there will be $250,000 cap on reinsurance claims.
The state began the application process last month by opening a public comment period on the state’s preliminary application. One public hearing has been completed with three more left during the 30-day period, including one in Baltimore Thursday.
Once that process is over the state will submit its formal application, which it hopes to have approved late this summer. At that point, the insurance companies are expected to refile their rate requests for smaller premium increases for 2019.
But even when rates are not as high as the significant increases expected to be filed next week, they still may be too high for many to consider staying in the market, especially as President Donald Trump’s administration weakens the individual mandate, Beilenson said.
“We’ve gone backwards in affordability of health care by years and years, and I think there are going to be a lot of people making these economic decisions that are going to tend to push them away from buying insurance,” he said.