Feds renew Md. ‘reinsurance’ program to continue reduced rates for individually purchased health plans

Federal agencies have approved a five-year extension on a waiver that helps keep rates lower for Marylanders purchasing health insurance from the state insurance marketplace known as the Maryland Health Connection.

According to a news release this week from the health connection, the U.S. Department of Health and Human Services and the Department of the Treasury have approved extending the waiver on the State Reinsurance Program, which works to keep costs down for those who purchase their own health insurance.

Certain regulations of the Affordable Care Act need to be waived to keep health insurance rates low for those who buy individual insurance plans in Maryland. The federal approval means that the Reinsurance Program can continue at least until Dec. 31, 2028. Without the approval, the program would have expired in December of 2023.

“Maryland’s Reinsurance Program has been very successful at keeping rates affordable for everyone who buys individual insurance in Maryland, on or off the exchange,” Maryland Insurance Commissioner Kathleen A. Birrane said in a written statement. “It has played a particularly important role in stabilizing premiums for Marylanders who do not qualify for subsidies.”

According to the Maryland Health Connection news release, the federal approval was “required technically as an ‘innovation waiver’ under Section 1332 of the Patient Protection and Affordable Care Act of 2010.”

“The program covers a portion of the costs of health insurers that serve Maryland Health Connection. The majority of funding comes from the federal government. State costs are funded through a 1 percent assessment on health insurance policies,” the news release explains.

That arrangement was the product of a deal that then-Gov. Larry Hogan (R) reached with Democratic legislative leaders in 2018, amid threats that Marylanders’ health insurance fees were about to spike considerably. The assessment — effectively a tax on insurance providers — was reauthorized with legislation during the 2022 General Assembly session. Hogan never acknowledged that the assessment essentially amounted to a tax increase.

According to 2022 data from the Maryland Health Benefits Exchange, nearly 93.9% of Marylanders were insured that year either through Medicaid or through private insurers. Still, there were about 369,000 Marylanders, or 6.1%, who did not have health insurance in 2022.

The Maryland Health Connection reports that Maryland offered the third cheapest average monthly health insurance in the nation at $472 this year. Utah and New Hampshire offered lower average monthly health insurance premiums at $431 and $469, respectively. This is based off of data from the Centers for Medicare & Medicaid Services.

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