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Maryland locks in lower premiums for individual health insurance market

Marylanders will pay lower rates to buy their own health insurance next year after a months-long effort to avoid sharp premium increases.

Gov. Larry Hogan and state Insurance Commissioner Al Redmer Jr. touted the lower rates Friday morning in Annapolis after the Maryland Insurance Administration approved the new premiums for plans offered on the state’s exchange.

The exchange sells insurance for close to 200,000 Marylanders who do not receive health insurance coverage through an employer.

“We decided to address the crisis head-on in Maryland by working together in a bipartisan way,” Hogan said. “We have made real progress toward solving our state’s health care challenges.”

Hogan, a Republican, worked with the Democratic-led General Assembly this year to pass a bill that kept in place a tax on insurance carriers that Congress had eliminated at the federal level. The money from the tax is used for a reinsurance program that creates a pool of money for insurers to help cover the most expensive claims.

Hogan said the program is the largest of its kind in the country and could serve as a model for other states.

That reinsurance plan was approved by the federal government, prompting insurance companies to revise their rate requests for 2019.

The insurance companies that sell individual health plans — CareFirst BlueCross BlueShield and Kaiser Permanente — initially requested average rate increases that ranged from 18.5 percent to 91.4 percent, depending on the type of plan.

Now the rates are decreasing by between 7.4 percent and 17 percent, Hogan announced Friday.

The new rates were officially approved by the Maryland Insurance Administration following a public hearing on Monday.

“There is no doubt that this is — after years of increases — positive news for those seeking individual coverage in Maryland,” said Brian D. Pieninck, president and CEO of CareFirst, which covers about two-thirds of the people who buy individual plans created under the Affordable Care Act.

CareFirst said customers who were in a preferred provider option plan may be able to get a better rate in a similar health maintenance organization, which already covers the majority of consumers. CareFirst plans to advertise the option in advance of the enrollment season that begins Nov. 1.

CareFirst is reducing the rate on its HMO by 17 percent, while rates on the PPO will decline 11.1 percent. It had been seeking increases of 18.5 percent on the HMO and 91.4 percent on the PPO.

Kaiser, which had sought a 37.4 percent increase for its HMO, now will reduce that rate by 7.4 percent.

“We are pleased that we were able to decrease our rates from 2018 as a direct result of the implementation of the reinsurance program,” said Scott Lusk, a Kaiser spokesman, in a statement.

Rising rates have been a major burden for the 20 percent of consumers who do not qualify for the exchange’s federal subsidies. The number of people buying plans on the exchange or directly from an insurer has dropped by about 18 percent since 2015, according to state insurance figures, though people drop coverage for a number of reasons other than cost.

Michele Eberle, executive director of the Maryland Health Benefit Exchange, said in a statement lowering the premiums will help.

“Lower rates, more people insured and protected and less uncompensated care is a positive for everyone,” she said.

Leni Preston, vice president of the advocacy group Consumer Health First, also said lower rates may increase participation.

“This is an extremely important step toward more affordable coverage for individuals, particularly those who have to pay for insurance themselves without any financial assistance,” she said. “They have been severely impacted by what is going on in the market.”

She cautioned, however, that the reinsurance program ends in five years and officials need to find permanent solutions. She said a state-created commission is exploring a half-dozen measures, including a “public option” that would allow consumers to buy into the low-income government plan Medicaid, a state-level mandate to buy coverage since the federal one was dropped, additional subsidies and combining the individual and small business markets.

Some recommendations could be made in time for the next General Assembly session in January. In the meantime, she said consumers buying plans for next year need to shop around to ensure they are getting the best deal.

Ben Jealous, the Democratic nominee for governor, also praised the lower rates but said other measures are crucial because the reinsurance program is temporary. And he said the lower rates likely remain unaffordable for many people because of multiple steep increases.

He is advocating for a universal health care system where everyone buys into Medicare, the government plan for seniors.

"Today's announcement is the product of hard work by Maryland legislators to take action to at least temporarily provide some relief to thousands of families who are having a harder and harder time affording their health coverage, if they can afford it at all,” Jealous said in a statement. "The truth is, we still need a long-term plan to bring down healthcare costs for everyone.”

Nonetheless, Hogan and Redmer took the opportunity to portray the process as standing up to help Marylanders in the face of dysfunction at the federal level.

“Because of the inability of Washington to address our health care crisis, Marylanders were facing the potential of health insurance rates nearly doubling,” Hogan said. “Without immediate action, the individual market in our state was literally on the brink of collapse.”

Added Redmer: “We decided we had to do what we could do at the state level.”

Friday’s event also afforded Hogan and Redmer an opportunity to again promote their efforts at a time when both are running for office. Hogan is seeking re-election, while Redmer is running as a Republican for Baltimore County executive.

Hogan held a ceremony in April when he signed the reinsurance bill and the governor held a State House news conference with legislative leaders in August to announce that the federal government had approved the state’s plans.

Redmer said the magnitude of the rate drops warranted another event at the State House, and said there weren’t any political calculations.

“The alternative is we don’t share important news to Maryland citizens because it occurs in an election year?” Redmer asked. “I don’t make up the calendar. We do this the same time every year.”

While Hogan is facing Democrat Ben Jealous in the gubernatorial election, Redmer is balancing his insurance commissioner duties with a campaign against Democrat Johnny Olszewski Jr. for Baltimore County executive.

Redmer’s county campaign involves a steady schedule of fundraisers, candidate forums and community events, sometimes during traditional working hours.

“I am running the Maryland Insurance Administration and also using annual leave to campaign when the opportunity exists,” Redmer said Thursday afternoon during a campaign event where he accepted an endorsement from a pro-business group.

On the campaign trail, Redmer proudly plays up his ties with the popular governor, saying that if they’re both elected, they’ll work together for the benefit of Baltimore County. Redmer often says he’s a “Larry Hogan Republican” and “if you like him, I’m your guy.”

Redmer’s bright red and yellow signs carry the tagline: “Governor HOGAN Endorsed.”

Hogan was the featured guest at Redmer’s campaign kickoff last year, and appears in web videos and direct mail in support of Redmer.

Baltimore Sun reporter Michael Dresser contributed to this article.

pwood@baltsun.com

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