The Maryland Senate moved forward on a bill Tuesday that would fund the state’s reinsurance program for the next four years.
The establishment of the state’s reinsurance program last year was lauded as a bipartisan success story. The program was created after the state sought a waiver from certain Affordable Care Act rules to establish a reinsurance pool to provide funding for catastrophic claims of policyholders in the individual insurance market.
The program, which is effectively an insurance pool for insurers, had the effect of lowering risk to insurers, who lowered the rates they offered on the state’s individual market last year.
Initial funding came after federal government did not assess a federal health insurance provider fee in 2019. The state imposed an identical fee on the insurance companies, which was enough to fund the reinsurance pool through mid-2021, Sen. Brian Feldman (D-Montgomery) said. The state collected $365 million from insurers and an additional federal payment of $373 million for the program.
The assessment previously placed on insurance providers by the federal government had been 2.75 percent on all amounts used to calculate the entity’s premium tax liability. The bill moving through the state would assess a 1 percent state fee through 2023 to continue funding for the program.
Before the creation of Maryland’s reinsurance program, insurers had requested an average rate increase of 30.2 percent, with rate increase requests ranging from 91.4 percent to 18.5 percent across carriers. With the reinsurance program in place, individual rates were ultimately approved at an average decrease of 13.2 percent, with decreases ranging from 17 percent to 7.4 percent across carriers.
With the decreasing costs, the state saw an increase in the number of people enrolled.
The state anticipated about 180,000 people enrolling in the individual marketplace last year; instead, about 212,000 people enrolled.
The waiver from ACA rules to keep the program running lasts through 2023, so lawmakers are seeking to pass legislation this session that would keep the program running until then.
“Can you imagine if we don’t have the money and that market collapses? Over 212,000 people. How it would effect the hospitals and how it would effect every other market?” House bill sponsor Del. Joseline Peña-Melnyk said at a hearing last month. “We all need to do something to make sure that doesn’t happen.”
Feldman said Tuesday that the bill is expected to generate $109 million through the state insurance fee and an additional $230 million in federal funding. The bill also tasks the Maryland Health Insurance Coverage Protection Commission – which is co-chaired by Feldman and Peña-Melnyk – with studying whether the state reinsurance program should be extended beyond 2023, and if so, how it should be funded.