As part of the federal tax-cut legislation in December, Republicans in Congress gutted a key component of the Affordable Care Act — the so-called “individual mandate” — which in part helped send Maryland’s individual health insurance market into what many feared was a death spiral.
For much of the year, legislators from the Maryland Senate and House of Delegates have huddled with members of Gov. Lawrence J. Hogan Jr.’s administration to carve a path through the arcane and highly complicated world of health insurance – and craft a solution to the enormous problems for the state brought on by Congress’s abrupt action three months ago.
Finally, in the last 10 days, legislators, policymakers, bureaucrats and even outside experts have emerged with a bipartisan answer for propping up the individual health insurance market in both the short and long term, while offering continued coverage through a state program.
On Friday — the eighth anniversary of President Obama’s signing the Patient Protection and Affordable Care Act into law — the Maryland Senate gave final approval to the first bill of a two-bill package to deal with the skyrocketing costs in the individual health insurance market.
That bill, the simpler of the two, now goes to Hogan’s desk for his signature. The Republican governor has said he would sign the measure into law, and it would become effective immediately, as an emergency bill.
The legislation authorizes a request to the federal government for a so-called “Section 1332 Waiver” to divert money to Maryland that is now being set aside to ease the dollar-draining effect of high-risk patients on the ACA’s insurance pool.
Under the measure, the diverted money would be used to the same end under a new “reinsurance program” in the Maryland Health Benefits Exchange, which administers the state’s health insurance marketplace and provides financial help to make insurance more affordable.
If the federal government approves the ACA waiver, which is considered likely, the specifics of how that money would be distributed would be decided by the Maryland Health Insurance Coverage Protection Commission.
The House version of the bill was initially sponsored by Del. Joseline A. Pena-Melnyk (D-Prince George’s), and Del. Karen Lewis Young (D-Frederick). In the Senate, it was initially sponsored by Sen. Thomas M. “Mac” Middleton (D-Charles), who chairs the Finance Committee.
The second bill, also an emergency bill and the more complex of the two, is now pending in the legislature and expected to be voted out next week and sent to the governor.
That legislation is designed to stabilize the teetering individual health insurance market by imposing a premium tax on insurers doing business in Maryland, thus generating $380 million to hold down costs for individuals buying insurance through a state program.
The emergency bill, described as only “a Band-Aid” for the short term by Middleton, its Senate sponsor, would impose a 2.75 percent tax on premiums of any insurance companies doing business in the state and pump millions into the Maryland Health Benefit Exchange, to hold down the cost of insurance offered in that marketplace.
But affordability has been a problem – and ultimately, along with state officials’ dire predictions of the market’s collapse, the reason for the bill.
There are just two independent health insurance providers in the Maryland Health Benefit Exchange program – CareFirst, which offers coverage statewide, and Kaiser Permanente, which provides coverage only in some areas of the state.
In 2018, rates for CareFirst’s preferred provider organization “silver plan” coverage jumped a whopping 52 percent, committee testimony showed.
Without the legislation, Middleton said earlier, premiums would have jumped another 40 percent next year, in 2019. If passed and signed into law, an increase in premiums would be held to between 5 percent and 8 percent, he said.
The House bill was initially sponsored by Pena-Melnyk and Del. Shane E. Pendergrass (D-Howard), who chairs the Health and Government Operations Committee.
Legislation still pending deep in committees of both houses would address the individual mandate problem head on, but whether that proposal for a “health insurance down payment” program will be taken up by the legislature this year remains unclear.
An earlier version of this article was unclear about the ways in which the federal government’s actions caused problems with Maryland’s individual health insurance market.