A health insurance mandate aimed at drawing more people into Maryland’s insurance market could help reduce premiums and make insurance more affordable, supporters said Thursday.
Legislation to create a penalty for people who do not have health insurance was heard Thursday by the House Health and Government Operations Committee.
“What this bill here is trying to do is that we have about 300,000-plus people that do not have insurance,” Del. Joseline Peña-Melnyk, D-Anne Arundel and Prince George’s and the bill’s sponsor, told the committee. “And we want to make sure that they get insurance.”
The federal individual mandate was essentially eliminated by 2017’s Tax Cuts and Jobs Act, leaving it to the states to enact a penalty if they wanted. States with their own penalty, or that have passed laws to create a penalty, include Massachusetts, New Jersey, Vermont and the District of Columbia.
The Maryland legislation would recreate the penalty in Maryland while also allowing the state comptroller and the Maryland Health Benefit Exchange to work to enroll people who could qualify for subsidies.
When people file their taxes, they can check a box that says they do not have insurance but are interested in getting health insurance. The comptroller’s office would send that person’s information to the exchange to help them get insurance.
The revenue raised from the penalty on those who choose not to get insurance would be designated for a special fund that could be used for rate stabilization on the individual market.
Some of these people could get coverage because they qualify for Medicaid. Others could get coverage for no cost or a small cost because they qualify for subsidies because of their income level.
Stan Dorn, a senior fellow at Families USA, told the committee he thinks about 130,000 more people in Maryland could get insurance at no or a low cost through the proposal. There are more than 300,000 people in Maryland without health insurance right now.
Mandate supporters believe that the penalty encourages more people to participate in the market, especially younger and healthier adults, often referred to as “young invincibles.” When they participate in the market more fully, they keep the insurance pool healthier, helping to reduce premiums.
“The people that will get insurance will be healthy people, and you will improve the pool,” Peña-Melnyk told the committee. “If you do something like what we are proposing, the rates will go down, and if we do not do it the rates will go up.”
Del. Susan Krebs, R-Carroll, worried that even with more options some people are being put into a position to buy insurance they cannot really afford.
Krebs and other critics have argued that a penalty would not encourage most people currently out of the market to buy insurance.
Under the proposal, individuals without insurance would have to pay almost $700 that could cover premiums for a month or two months, depending on a person’s age and plan preference.
The bill tries to address this by allowing people to apply for hardship exemptions from the exchange. That could apply to people who have to pay a significant portion of their income toward insurance, despite their income level.
The proposal has broad support among House Democrats, with more than 70 cosponsors, but it does not have enough cosponsors on the House Health and Government Operations Committee to guarantee a favorable report.
Sen. Brian Feldman, D-Montgomery, sponsors the Senate version, which needs to gain approval from both the Senate Finance and Budget and Taxation Committees.
Similar legislation did not move out of the committees last year.
Outside interest groups supporting the proposal include MedChi, the state medical society; the Maryland Hospital Association; Consumer Health First; and the Maryland Citizens’ Health Initiative.
The two insurers on the individual market, CareFirst BlueCross BlueShield and Kaiser Permanente, also support the legislation.
The legislation comes on the heels of last year’s work to create a reinsurance program that led to an average rate decrease on the individual market of 13.2 percent.
Deborah R. Rivkin, CareFirst’s vice president for government affairs, encouraged the committee to make sure that if members pass a mandate they continue to fund the reinsurance program to keep health insurance affordable.
“It’s hard to put a penalty in place if (health insurance is) not affordable,” she said.