Both the Maryland Senate and House of Delegates have passed a bill that represents an effort by the state to salvage the state’s Obamacare-born individual health insurance marketplace.
The bill details a plan that could allow insurance carriers operating in the individual market to share more risk, and keep premium prices down. It passed both chambers through strong majority votes: 135-0 in the House and 43-4 in the Senate. A final version now heads to Gov. Larry Hogan, who said Monday he looks forward to signing the measure soon.
Hogan on Monday applauded legislators for working together to address the "serious problems" facing health insurance markets.
Maryland, as many other states across the country, has seen serious struggles in its Affordable Care Act-born individual marketplace. Enrollments in health insurance plans through the state exchange have dropped over the past several years, as premium prices have spiked. This year, a total of 153,571 Marylanders enrolled in private health coverage for 2018 on the state’s Obamacare marketplace, a drop of over 4,000 from last year. Meanwhile, individual plan prices have shot up by double-digit percentages each of the past four years. Some consumers have told state insurers that if prices for marketplace plans continued to spike, they would opt to forego health coverage altogether. And insurers have reported seeing major financial losses in the market — to the tune of hundreds of millions of dollars.
Insurance officials and Maryland lawmakers have feared market implosion, and complained that federal lawmakers have not done enough to fix the ACA and stabilize insurance markets. The Trump administration has also made moves that have threatened further destabilization.
"Because of the actions and inaction in Washington, the Affordable Care Act was poised to force health insurance rates for Marylanders to increase again by 50 percent or more. That is simply not acceptable," Hogan said during a press conference Monday. "Our administration has been working on potential solutions for more than a year. We came together and rolled up our sleeves to address this crisis head on."
The proposed law aims to correct some of those effects, with the creation of a state reinsurance program. The law would allow the Maryland Health Benefit Exchange, the organization that runs the state’s ACA exchange, to apply for a Section 1332 waiver through the federal government. These waivers, which could be requested starting last year, authorize states to forego certain ACA requirements and experiment with different health care strategies. Several other states, including Oklahoma, Alaska and Iowa, have taken this approach to skirt ACA rules and try their hand at restructuring markets themselves. In Maryland’s case, the exchange would be seeking permission and federal funding for the creation of a reinsurance fund to support the two carriers operating in the state’s individual marketplace: Kaiser Permanente and CareFirst BlueCross BlueShield.
Del. Joseline A. Pena-Melnyk, lead sponsor of the passed bill, said the state will hopefully be able to secure federal funding through a 1332 waiver, to support a reinsurance program for up to three years, "while we seek a permanent solution."
The Maryland Health Benefit Exchange will work with an actuarial firm to determine what the parameters of the waiver proposal should be, including how much funding the state could reasonably seek. Michele Eberle, executive director of the health exchange, said other states that have implemented their own reinsurance programs have seen an impact on premiums of up to 20 percent.
Reinsurance is essentially insurance that is bought by insurance carriers that helps them mitigate their risk. Maryland Insurance Commissioner Al Redmer used an analogy to explain the concept.
"If I go into a hospital and start running up medical bills, my insurance carrier will pay the cost up to a certain amount, depending on my plan," Redmer said. "From that point on, the reinsurance pool would help cover any additional costs."
When risk is more spread out in this way, carriers lose less on individual consumers and are better able to keep premium costs down, Redmer explained. The original ACA law included provisions for reinsurance programs. But those measures have since gone away at the federal level.
Chet Burrell, CEO of CareFirst, has on multiple occasions pointed to the lack reinsurance programs as a factor that has contributed to the ongoing collapse of ACA marketplaces, and has called for federal solutions. CareFirst, the state’s largest insurer with about 70 percent market share, has lost more than $500 million in the individual market since 2014. The company declined to comment for this story.