State lawmakers put finishing touches last week on plans to apply federal health care reforms in Maryland come Jan. 1. But who becomes newly insured — and at what cost —still worries stakeholders as the state speeds toward becoming one of the first to adopt a revamped system.
Under legislation passed by the House of Delegates and Senate, more low-income Marylanders would qualify for government-funded health care through Medicaid, and an existing tax on health insurers would sustain a new insurance marketplace once federal support wanes.
State health and insurance officials face a long to-do list during the next nine months as they implement reforms needed before the Affordable Care Act takes effect. They will decide what health plans will be offered in the state, and at what prices; recruit uninsured residents for new coverage; and launch a complex computer system to parse who is eligible for new government assistance.
Given all the work yet to be done, there are still questions about how health care and insurance will look to consumers and how much it will cost. How many people take advantage of the new coverage— and how healthy they are — will help determine whether patients' bills will continue, slow or reverse their rise.
And a dramatic proposed change in the way state hospitals can charge for services could add to the upheaval. On Tuesday, state hospital regulators submitted an application to change the state's Medicare waiver, which allows them to set hospital rates. In other states, hospitals are reimbursed based on rates negotiated with insurers or dictated by Medicare. The proposal would create incentives for Maryland hospitals to reduce the cost of care, ending compensation based on inpatient admissions and thus removing an incentive to fill more hospital beds.
State leaders who embraced adoption of the Obama administration's 2010 reform law acknowledge the uncertainty. But Gov. Martin O'Malley's top health care deputy said the administration crafted the complex new system over three years hand-in-hand with key players in the state's health care industry.
"I think it's natural that when you have the type of reform we have seen in the Affordable Care Act, and whether it's in health care or any other policy area, there's always going to be some trepidation. It's pretty much around the uncertainty or the unknown of what's to come," Lt. Gov. Anthony G. Brown said. "I believe in Maryland, given the nature of our process, we have done a good deal to tamp down the anxiety."
That process began when O'Malley's issued an executive order the day President Barack Obama signed the health act into law, launching a program to oversee health reform changes in the state. Since then, the O'Malley administration and state lawmakers have passed laws including one in April 2012 creating the Maryland Health Benefit Exchange.
Now the state aims to open the exchange Oct. 1, so those in search of affordable insurance can enroll in plans by the start of 2014. To meet that timeline, "every day counts," said Rebecca Pearce, the exchange's executive director.
Insurers must submit proposed plans and rates Monday to the Maryland Insurance Administration, giving an idea of what choices the exchange might offer consumers. The state's regulatory review of those plans is expected to take months; state insurance officials have broad authority to ask for changes before approving plans for sale.
The exchange hired public relations firm Weber Shandwick to develop an advertising campaign likely to hit television and radio waves, websites and public transit by September. It is hiring six regional contractors to coordinate grass-roots education on coming health reform changes, as well as a vendor to train those responsible for outreach and another vendor to launch a statewide telephone helpline for people with questions about the exchange.
Health officials aim to reach Maryland's estimated 750,000 uninsured residents and explain their new coverage options so they can enroll by the end of the year. Their goal is to enroll 147,000 in insurance in the first year.
Another 108,000 will gain coverage through expanded Medicaid eligibility O'Malley is expected to sign into law this spring.
But some question whether the state's expectations will become reality. The federal health reform law includes a mandate that all be covered by health insurance or pay a penalty, a divisive aspect of the legislation that the Supreme Court upheld last year. That leaves open the possibility that some could choose to remain uninsured, and outside of the exchange's risk pool. Reform rests on the notion that spreading the risk over more individuals will reduce costs for all.
"There will not be a magical flipping of the switch where all of the sudden everyone is going to be covered," said Al Redmer Jr., a former state delegate and state insurance commissioner under Republican Gov. Robert L. Ehrlich. "There's a percentage of folks that will never get enrolled for a variety of reasons."
That could mean a problem for insurers, he said, and for health reform advocates' predictions that competition among carriers in the exchanges will drive down the cost of insurance premiums.
A Society of Actuaries report released Tuesday forecast that medical claims on individual insurance policies could rise by nearly a third across the country under the federal health reform mandates. For Marylanders who buy insurance individually, rather than through their employers, costs could rise by more than two-thirds, the society said. The increase will be driven by more chronically ill people gaining access to coverage as healthy people opt to pay the penalty for lacking insurance, the report said.
"The ability to manage the risk is going to be challenging," said Frank Kelly, CEO of Hunt Valley insurance administrator Kelly & Associates Insurance Group. "I think there's going to be some fairly significant rate increases, but it remains to be seen."
State and federal health officials cast doubt on such forecasts. U.S. Health and Human Services Secretary Kathleen Sebelius called it "speculation," but acknowledged costs could rise for men and young people. For Maryland, the estimates don't take into account that the state won't immediately shift those covered in a high-risk insurance program into the exchange, for example, said Carolyn Quattrocki, executive director of the governor's Office of Health Care Reform.
Getting more Marylanders covered by health insurance also could help hold down or even reduce insurance costs, because the cost of care the state's uninsured receive —mostly in expensive emergency rooms — is spread across all insurance holders in the state, Quattrocki explained.