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Md. reinsurance application has several key dates ahead

The Maryland Health Benefit Exchange hopes the state’s reinsurance waiver application will gain approval by the end of August, officials said at the exchange’s monthly board meeting Monday.

Over the next couple of months, Maryland will see several milestone dates, including a key report from health care actuarial firm Wakely as the state moves to create its reinsurance program.

The state officially submitted an application to the federal government last month and expects approval of the reinsurance waiver to significantly reduce the rate increases insurers on the Maryland individual market asked for this year.

The waiver application was submitted May 31, and the federal government has 45 days to review it for completeness.

The state legislature authorized the exchange this year to pursue a required waiver from the federal government in order to set up a state reinsurance program.

In a reinsurance program, insurers can submit claims over a certain amount to a reinsurance pool, which will cover 80 percent of the claims. The state has not yet set that attachment point for the claims.

Part of that decision depends on a Wakely report looking at how the reinsurance program will work in the state. That report is due June 30.

The report will also look at what regulations the state must put in place for the reinsurance program. The exchange will hold public hearings on those regulations in July and August.

While the application seeks federal approval for the reinsurance program, the regulations will detail how the program will work at the state level. These regulations must be in place by Jan. 1, 2019.

The pool will be funded by a state tax on insurers that is normally assessed at the federal level but was set aside for the year in the federal tax legislation.

Insurers and state officials expect that the program will help reduce premiums by absorbing much of the costs of covering the sickest members, who are the most likely to purchase individual health insurance.

Last month, Maryland’s two insurers on the individual market, CareFirst BlueCross BlueShield and Kaiser Permanente, asked for average premium increases greater than 30 percent.

CareFirst anticipates approval of the waiver could allow its premium requests to drop to single digits or possibly even lead to premium decreases.

Kaiser, however, has expressed concerns that the benefits of the reinsurance program may not be spread equally among the carriers because of how it will interact with the Affordable Care Act’s risk adjustment program. That program rewards carriers who take on sicker patients, and because CareFirst is the only carrier with a PPO product and the only carrier in the state’s rural regions, it gets money from Kaiser through those risk adjustments.

The June 30 Wakely report is expected to help the exchange figure out how to navigate the dispute.

For Maryland and the two insurers, time is critical: Any change that would allow insurers to refile at lower rates depends on the waiver application’s approval in time for the premiums to appear on the individual market’s November opening.

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